Tuesday, May 27, 2014

The Prison Industrial Complex: Private Savings at Public Expense



    
The prison industry is the second fastest growing sector of the American economy.  This remarkable growth is the result of an increasing number of contracts being awarded to an increasing number of private companies.   Those companies discovered just how profitable it was to be in the business of building and running prisons and, as a result, a growing number of America’s prisons have steadily been handed over to private interests by the panhandling of a political lie.  That lie is the claim that the privatization of prisons is the only way to save money for John and Jane Q. Taxpayer.  The problem is - it doesn’t. In fact, in both the long and the short run, many private prisons end up costing taxpayers more money than they save.  Nevertheless, the responsibility for an increasing number of America's inmates has simply been transferred to private interests in order to create private profits at public expense.  

The ruse that prison privatization saves money was uncovered in 1996, when the Government Accounting Office examined five studies comparing costs of public and private prisons.  Despite private prison firm claims of reducing costs, the GAO concluded that the “studies did not offer substantial evidence that savings have occurred.”  Yet this hasn't stopped those firms from steadily singing such empty boasts anyway.  Even a more recent report, commissioned by the U.S. Attorney General, noted how private prisons attempt to save money, not by being “more efficient” at their job, but by cutting back on staffing, security, and medical care.[i]  While such cutbacks increase earnings for shareholders, they do so by passing the costs on to society. After all, who do you think pays for the worsening health issues such inmates are left to suffer from when they're finally released?

Unlike publicly operated prisons, a private company’s interest in cutting costs is aimed, first and foremost, at increasing profits and shareholder prices.  This devotion to the bottom line leads to less investment in other areas like training, recreational activities, and sometimes even food.  While it may be tempting to think that convicted criminals deserve what they get, this ignores the fact that, without training, such convicts are more likely to become repeat offenders and therefore permanent wards of the state.  In fact, in an effort to ensure this will happen, many states have even scrapped the educational and drug treatment programs which tended to lower recidivism rates (typically by 60-75%), that publicly operated prisons provide. [ii]  Such fears are borne out by serious complaints about conditions in privately run facilities in a number of states, according to an Amnesty International report (10/98).[iii] 

Such cutbacks become practically mandatory in a corporate structured system because privately run prisons are forced - both by their charter and by law - to serve, not the interests of inmates or employees, nor even those of the state or the society in which it operates, but of the financial institutions that own them.  In addition to keeping services at an absolute minimum, such powerful financial interests are further served by keeping occupancy rates as high as possible.  Industry experts, for example, say that a 90-95% capacity rate is needed to guarantee the hefty rates of return needed to lure investors.

 In a system of prisons for profit the inherent pressure to always incarcerate more offenders is compounded by the motivation to increase the length of mandatory sentences for even the pettiest of crimes.  The underlying incentive, therefore, is to keep recidivism rates as high as possible because repeat offenders equal repeat customers, people who already 'know the drill.'  The fact that a "business," as motivational business speaker and author Brian Tracy has pointed out, always wants to create and keep its customers explains why so many educational and drug treatment programs have been scrapped.  Likewise, the political will to always get tougher on crime is not because society will be safer by locking up increasingly more nonviolent offenders, but simply because, in a private prison system, profits only rise in tandem with incarceration rates. 

Nor does it appear that private prisons are more capable in handling prisoners than state or federally run prisons. Assaults, for example, are much higher in private facilities than federal prisons. An industry wide survey conducted in 1997 found 49% more inmate on staff assaults and 65% more inmate on inmate assaults in private prisons compared with the same types run by the government, and a tally of news reports in 1999 also showed far more escapes from private prisons.[iv]

The fact that many corporations now rely on the prison industry as an important source of profits helps explain why prisons began to proliferate at a time when official studies indicated crime rates were falling.[v]   The U.S. violent crime rate has declined steadily for a number of years, as a matter of fact.  In 1977, the American homicide rate was 7.7 per 100,000 population.  In 1980, that rate had risen to 10.2 and continued to exceed 9 per 100,000 population through 1994. From then until 2007, however, the homicide rate declined each year, reaching a low of 5.5 in 2004 and increasing slightly to 5.9 in 2007. Similar rates of decline were recorded for forcible rape, robbery, and aggravated assault.[vi] Such statistics demonstrate how the increase in incarceration is not the result of increases in crime rates but from changes in penal policy. 

 A number of private industries currently profit from the misery that such changes in penal policy have produced.  Those industries include construction companies and the politicians who receive financial support from them at each election.  It also includes telephone companies, suppliers of goods and services, private prison corporations, and countless residents of small towns who depend on the prison industry for employment.  In many cases, a town’s citizens are members of powerful prison guard unions, whose votes politicians rely on to be reelected.  All these interests, and still others, militate against the reduction of U.S. prison populations even as the tax dollars being spent on private prison contracts prevents the funding of such vital needs as the education of children and young adults, support of the homeless, and feeding the poor. [vii]

Much like the financial institutions who demonstrated they were too big to fail in 2008, so the prison industrial complex has become too big to dismantle.   America’s economy has become so dependent on jailing people, in fact, that “the U.S. now has the highest rate of incarceration in the world, dwarfing China and Iran.”  “If we return to a rate of incarceration of that of the 1970’s,” points out Michelle Alexander, “when many civil rights attorneys felt the incarceration rate was egregiously high, we would have to release 4 out of 5 people who are in prison today. More than a million employed by the criminal justice system could lose their jobs. That’s how enormous and entrenched this system has become in an incredibly short period of time.” [viii]

At the end of the day, the only thing such a system seems to be saving the American taxpayer is from ever letting slavery become politically unfashionable. Indeed, it is a miracle of economics to see how the profit motive continually evolves in its ability to provide ever more creative ways of dressing up the old sow of slavery in the latest lipstick of political punditry.    For the rest of us, it is simply kissing a pig through the prison bars. Indeed, all of us who willingly believe the political lie that such institutions save us money, pay handsomely for the privilege to do so.  



[i]How corporations hurt us all: saving our rights, democracy, institution by Dan butts. P72
[ii]Id.

[iii]Id.  P72
[iv]Id. 72
[v] Are Prisons Obsolete? Angela Davis p 85
[vi]  The American Criminal justice System: how it works, how it doesn't, and how to fix it. By Gerhard Falk p 152
[vii] Id 155
[viii]http://www.youtube.com/watch?v=IgM5NAq6cGI Michelle Alexander: Drug War Racism Feb. 19, 2010

Friday, May 23, 2014

The Prison Industrial Complex: The Crime of Addiction and an Addiction to Profit



Nothing makes people redefine addiction as a crime faster than the profit motive, largely because there is no better way to maximize profits than through slave labor.  In fact, maximizing increased returns from the one can only be assured through a substantial investment in redefining the other.  And those who stand to make the most understand how much their profits hinge on their ability to use, and in many instances even abuse, both. 

Generally speaking, a disease is as much a danger to the person who has it as it is to the society to which that person belongs.  It doesn’t matter if the person is suffering from sickle cell disease or addiction.  Yet one is treated with penicillin and the other with punishment.  Both methods are used to ‘protect society,’ per se, only one seeks to cure patients in a society while the other simply removes them.  While the different methods used to treat both diseases were instituted largely out of an ignorance that mistakenly defined the two as different, advancements in the understanding of diseases has allowed us to see how both, at least in some ways, are very much the same. 

The difference, however, is that powerful economic interests have grown too dependent upon the old definitions, and until as much profit can be made from the new understandings as is being generated from the current system of medieval beliefs, things are unlikely to change.  Why is this the case?  Because treating addicts like criminals has become the corner stone for America’s new kind of “supply side economics.” This kind of economic model is one that conservative economists like Milton Friedman either didn’t see coming, or perhaps had in mind all along.

Traditional ideas about “supply side economics” were based on the belief that economic growth could be created by reducing both regulation and taxes on capital gains and income.[i]  With the rise of the PIC, however, a new kind of ‘supply side economics” emerged that, in contrast to the old theory, thrived off an increase in regulation and taxes. The difference was that the old ideas applied to corporate persons while the new ideas would apply to real people. As companies became less regulated in a society, people became more, and as corporate taxes were reduced to attract and expand new businesses, personal taxes were increased to build prisons for an expanding number of newly defined criminals.  Eventually, one discovered a sinister way to increase its profits by feeding off of the other. That discovery would likewise result in nurturing both systems through an addiction to profits.   

  One of the greatest ironies of the PIC, therefore, is how some companies have developed an addiction to a source of cheap labor comprised mostly of addicts.   Breaking the addiction of the former, however, is far more difficult, because it would require not only a great deal of discomfort on the part of shareholders -  a group altogether amoral when it comes to decisions that effect share prices -  but also a willingness to break with a religious devotion to the bottom line.  In the religion of today’s economic theory, such a move would be considered a stock market sin, because it would require sacrificing profits over people. It just wouldn’t make good business sense, in other words, or dollars for that matter; dollars that could be used to pad the bottom line instead of paying a basic minimum wage. And it is just such “savings” that feeds corporate addiction. 

“Many companies have been exploiting prison labor forces at wages up to 80% or more below the national minimum wage ($5.15/hr). Contractors who have used this captive labor force include AT&T, U.S. West, Boeing, Chevron, Starbucks, Eddie Bauer…Microsoft, Dell Computers, and Bank of America.  In Ohio, for example, a Honda supplier pays its prison workers $2 an hour for the same work for which the UAW has fought for decades to be paid $20 to $30 an hour.  Konica has hired prisoners to repair its copiers for less than 50 cents an hour, and in Oregon private companies can lease prisoners for only $3 a day.[ii]  Prisoners do data entry, make telephone reservations, raise hogs, shovel manure, and make circuit boards, limousines, waterbeds, and lingerie for Victoria Secret, all at a fraction of the cost of “free labor.”[iii]
 
 Gordon Lafer further notes that private prisons are not only public service contractors, but the highest margin temp agencies in the nation. In Oregon, a number of public agencies are using prisoners for high-skill work that would otherwise be filled by regular public employees.  Such inexpensive help surely makes prison labor hard to resist.  What’s more, those who have invested in private prisons have found that prison labor is a pot of gold.  After all, prison employees require no payment of benefits and have almost no rights.  Additionally, there are no strikes, no unions, no unemployment insurance, and no workers compensation costs.  Such savings allows corporate firms, under government contract, to operate as cheaply as possible to insure profit. [iv]

And nothing ensures a corporations addiction to profit better than claiming that addicts are nothing but criminals. Considering the financial collapse of 2008, they certainly seem to have a point. In fact, it would be hard to find anyone in the world who knows more about the subject than they do. 


(NOTE: Milton Friedman, although a huge supporter of supply side economics, also believed that making drugs illegal not only ensured that criminals would have a monopoly over those drugs, which in turn would only increase their willingness to use violence to protect that monopoly, but that it was also immoral.  As such, his ideas on economics did not cause the PIC directly.  Instead, the PIC simply utilizes supply side economics to its advantage, and much to the disadvantage of everyone else.)

 


[i] Wikipedia
How corporations hurt us all: saving our rights, democracy, institution by Dan Butts, p. 70
[iii]Linda evans and eve Goldberg. Pg 84.Are Prisons Obsolete?
How corporations hurt us all: saving our rights, democracy, institution by Dan Butts, p. 70

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