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| Thought Leaders: Policy |
Incarceration Nation
Byron Eugene Price
08/01/06
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Amid the debate over how badly U.S. workers suffer when their jobs are outsourced to foreign lands, we find comfort in the realization that there is one home-grown industry that will never move to India or China: for-profit prisons. Financially strapped government entities at all levels are moving to privatize their prisons as populations at their existing facilities exceed capacity and the budgets that pay for them shrink. According to a 2005 report by the Bureau of Justice Statistics, the number of federal inmates housed in for-profit facilities has increased by 60 percent since the year 2000.
Given that the U.S. incarcerates 25 percent of the world’s prison population—2.2 million inmates in June 2005, 500,000 more than the People’s Republic of China, which has five times our population—it would appear that the rapidly growing for-profit prison industry has found an extremely fertile niche. That three leading for-profit prison companies—Corrections Corp. of America (CCA), Geo Group and Cornell Companies—have gone public and performed well in the markets is a testament to their growth potential.
And growing they are. CCA’s total revenue and gross profits have increased in each of the past three years. With three currently vacant incarceration facilities and two additional facilities under construction, CCA is preparing for a significant expansion. Between 2003 and 2005, the Geo Group, which claims to manage 36,000 “offender beds” in North America, Australia, New Zealand and South Africa, saw gross profits increase and, in November 2005, acquired competitor Correctional Services. Cornell Companies also enjoys steadily increasing revenues. In April 2005, it acquired Correctional Systems and gained operational control of eight additional jails, six adult community-based correction facilities and five alternative sentencing programs located in California, New Mexico, Texas and Kansas.
Yet, despite the obvious potential of these and other for-profit prison companies, investors would be wise to consider the full costs of private incarceration before placing a buy order. Obviously, the future growth of publicly held prison companies is ultimately dependant on an ever-increasing prison population. Beyond financial considerations, there is an enormous social cost that underlies the for-profit prison business model, a cost that will eventually dampen the enthusiasm of even the most cynical investor.
In today’s social and budgetary climate, the business model behind for-profit prisons is sustainable only when investors ignore its inherent social costs and risks. The incarceration rate for females, for example, is increasing at an alarming rate, which means children are becoming wards of the state. Many of these children wind up in jail themselves after spending their childhoods bouncing around the system. The current separation of children from their families has disproportionately impacted the black community in a tragic social dynamic reminiscent of slavery, which separated family members at unprecedented levels. While this dynamic will guarantee the for-profit prison industry a needed supply of inmates, it will, if not corrected, destroy the already frayed social fabric of certain communities, negatively affecting society as a whole.The Invisible Handcuff
One often ignored consequence of mandatory sentencing guidelines, such as California’s notorious “three strikes” law and the automatic imprisonment of low-level offenders, is the consignment of children to the juvenile justice and social welfare bureaucracies. These children are at increased risk for many of the social ills that trip up younger members of our society, including truancy, teen pregnancy, drug use, gang involvement and sexually transmitted diseases and infections.
By attaching a profit motive to incarceration, we are anesthetizing ourselves to the truly horrific costs of a business model that is, in purely financial terms, exceptional. Given that the problems that plague the poor eventually affect the entire social order, are we, as a nation, willing to accept the social costs that accompany nonviolent offender crime? We now spend $200 billion on corrections stemming from the war on drugs. In many states, we spend more on corrections than education.
This trend will continue as long as we use incarceration as a first option for nonviolent offenders and spend exorbitant amounts on corrections, all the while reducing education budgets. The profit potential of publicly held prison companies is very real—at least in the short term. The question is whether investors are willing to live with the longer term consequences of their investment decisions.
 | Byron E. Price, an assistant professor of public
administration at Rutgers
University, Newark, is the author of
Merchandizing Prisoners: Who Really Pays
for Prison Privatization? |
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