Private jails turn a profit for capitalists with conviction

Belfast Telegraph

Tuesday, 8 May 2012

The rickety economic recovery in the US has many businesses pondering whether or not now is the time to expand their operations. But there seems no such hesitation in at least one industry – the booming for-profit prison sector.

In February, America’s largest private prison outfit, Corrections Corporation of America (CCA), sent a letter to 48 states offering to buy government-run prisons to help states tackle ‘challenging corrections budgets’.

In return, CCA said that it will require a 20-year management commitment from the states and guarantees that given prisons will have ‘sufficient inmate population to maintain a minimum 90% occupancy rate over the term of the contract’. On the face of it, CCA needn’t worry about occupancy rates. The US has the highest prison population on the planet – both in per capita and absolute terms.

America has 5% of the world’s population, but 25% of its prison population. One out of every 100 people in the US is in prison.

The growth of private prisons in America is a relatively recent phenomena. In 1980, there were none. Today, there are 150.

Between 1990 and 2009, the number of inmates in private prisons grew from 7,000 to more than 129,000 – an increase of about 1,600%. Currently, 16% of federal prisoners and 6% of those held at state level are in private jails.

After growing during the 1980s and early-1990s, the private prison industry stalled somewhat in the late-1990s as many states turned to sentencing reforms and early-release programs to cut costs.

Then, after the 9/11 attacks, business boomed as security spending grew dramatically.

And as Immigrations and Customs Enforcement (ICE) began cracking down on illegal immigrants, CCA and other private prison companies landed lucrative contracts to run some of the detention facilities for the thousand facing deportation.

The private prison boom hasn’t gone unopposed. Since the spring of 2011, the National Prison Divestment Campaign (NPDC) has been working to pressure pension funds and other investors to withdraw their investments from companies such as CCA and GEO Group.

In May 2011, NPDC scored a major victory when Pershing Square Capital Management divested itself of 7m CCA shares, worth about $200m.

And, in January, the United Methodist Church Board of Pension and Health Benefits withdrew $1m in stocks from both CCA and the GEO Group. On the heels of these successes, NPDC has vowed to step up its efforts. But, as evidenced by CCA’s February letter, the private prison industry is aiming high, too.

In the last 10 years CCA has splashed out $17.6m lobbying Congress and federal agencies.

And the pay-off for CCA and other for-profit prison outfits hasn’t been bad.

The industry has been the beneficiary of some $68bn in tax-free government bonds floated in order to help them construct their money-making jails.

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