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
[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