Big Business – The Prison Industrial Complex

December 14, 2013 • Americas, Crime, Politics

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US incarceration timeline

US incarceration timeline (Photo credit: Wikipedia)

Prisons in America are big business. An industry worth hundreds of millions of dollars and profiting from each individual that walks into its secured compounds – the American prison industrial complex is worth examining.

To many outside of America the very idea of private prisons (as with other essential industries) is seen not only as distasteful but also as ripe for corruption. When there is an aspect of financial benefit in gaining and maintaining more prisoners, it is vital to investigate the links between all involved parties.

Simply put, private companies profit from the sentencing of criminals – they profit every time a sentencing adds someone to the already swollen ranks of the American penal system. From private prison companies, to prison builders, to security companies, transportation companies, bed brokers and more, there is an awful lot of profit to be made in the industry. The profiteering doesn’t end simply at the imprisonment of criminals though – they are also an enduring source of revenue in and of themselves – a yearly upkeep from the government to the tune of around $24,000 each and through the profits of inmate labour.

The cash-for-kids scandal, which unfolded in 2008, highlights the grim reality of what can happen when there is such ample opportunity for corruption. President Judge Mark Ciavarella and Senior Judge Michael Conahan, both of Luzerne County Court, were prosecuted for taking $2million worth of bribes from a private prison builder in return for giving young offenders maximum sentences in order to increase the number and duration of stays of inmates at this prison builder’s facilities. The Pennsylvania Supreme Court had to overturn some  4000 young people’s convictions issued between 2003 and 2008 that Ciavarella issued. It is worrying both the breadth and length of this fiasco, no doubt enabled by the fact that Ciavarella was President Judge at the time and it serves to show how when conditions allow, even those we trust to uphold the law are susceptible to corruption.

The cash-for-kids case begs the question, is this simply a one off case? Or is it simply the only case that has been brought to light? It is also indicative of a far deeper problem at hand; the problems that can arise when the law and money making enterprises are so closely aligned.

Incarceration rates in the USA are phenomenally high. The statistics are frightening. The incarceration rates in the USA are the highest in the world, at 716 per 100,000 in 2011. Further, in 2006, 7.2 million Americans were in some way under probation, in prison or otherwise under control of justice system, making that 1 in 32 people in the USA.

This is in stark contrast to countries that are generally regarded as authoritarian such as Russia and China with 577 per 100,000 and 120 per 100,000 in prison, respectively.

There are around 2.23 million inmates currently, each costing around $24,000 a year to keep. This is almost double the amount of prisoners in 1992, at 1.2 million incarcerated. The root cause of the huge explosion in imprisonments is because of Nixon’s War On Drugs – a campaign with a stated aim to decrease the illegal drug trade, and Nelson Rockefeller’s mandatory sentencing legislation in New York State in the 1970’s.

So Then, Who Profits?

Eric Schlosser likens an inmate at prison in much the same way as a guest at a hotel. The fundamentals are the same – it is in the interests of a hotel to full up every room and to keep every guest as long as possible – the same applies for prisons. The labour costs are the same no matter the occupancy rate and profits are therefore maximized when the occupancy rate is maximized. Schlosser also points out that even if though the idea of a prison attempting to lengthen a prisoners stay is ghastly there is historical evidence that it has happened. In the 19th century New York State had a fee system for prisoners – sheriffs charged inmates for their time in jail. When the fee system was abolished, the inmate population dropped, in some parts of the state sometimes by as much as half..

The agency responsible for reporting bad behaviour of inmates is of course the security personnel within the prison – the same group in who’s interest it is for occupancy rates in the prison to stay at peak.

The labour costs themselves in private prisons are lower – correctional officers earn lowers wages than their government counterparts, whilst also receiving lower benefits. This is not mimicked in the higher levels of private prisons – managers earn more than their government equivalents.

The upkeep of prisoners is paid by the state. This includes all aspects of a prisoner’s life, the breakdown of cash flow reflects this. The individual county in which the private prison is located will get a cut, as does the private transportation company that ferries the inmate, also a bed broker (a directory which lists the prisons and the state) gets a cut and finally the private prison gets paid. Money is not only made in the process of imprisonment, but through penal labour, profits are further earned in the long term.

Inmate labour is the free-marketeering equivalent of a jackpot, like a small enclave of a third world country close to the consumer. Workers who never strike, are always punctual, don’t receive any benefits and best of all earn only a pittance a day, it’s as if there are small pockets of Bangladeshi garment factories dotted around America. The daily earnings of an inmate labourer can make between a single dollar to less than five dollars a day – this is little better than Asian sweatshop rates.

An awful lot of industries profit off this sweatshop style laboring; the military has 100% of its helmets, ammunition belts, ID tags, shirts, pants and others produced by federal prison inmates. Additionally a multitude of other products are manufactured in prisons: paints, paintbrushes, home appliances, furniture and so on.

Where Are The Benefits?

Privatising prisons and the systems surrounding them ostensibly make for better financial value; services required are won through bidding on contracts. This certainly seems like an attractive option, by streamlining and cost-cutting. Private employers are not obligated to pay employee pensions and wage obligations that government agencies are – making savings of between 5 to 15% according to the CEO of CCA, Damon Hininger.

There is also a quicker turnaround time for construction of penal facilities without government red tape. On top of this private contractors can also cut costs by building facilities to house prisoners from another state. CCA for example operates the Saguoro Correctional Centre in Arizona, housing inmates from Hawaii as labour and construction costs are more expensive there. This, though, has the effect of punishing the family of inmates incarcerated in another state.

In running for elected office there are few issues that appeal so resoundingly with the electorate as safety. Campaigning to be seen as tough on crime remains a popular tactic, after all, if one isn’t tough on crime then isn’t the implication that they are soft on crime? This is illustrated nowhere better than with Nelson Rockefeller, a moderate Republican who had big intentions of running for the Presidency of the United States and needed a way to make himself more electable for the top office. Nixon also ran on a campaign of law and order.

Senior staff in government benefit from their high rank, as they can utilise their position for lobbying. In Arizona, the most private prison-friendly, it was revealed that two of Governor Jan Brewers close advisors were CCA lobbyists.

The savings made by private prison, however, have been disputed. Arizona State Legislature states that private prisons simply cherry pick their inmates, taking on the easiest and lowest risk prisoners and leaving the most expensive ones with the taxpayers. The savings made by private prisons claims Richard Oppel is precisely because of this; leaving the risk and burden with the government facilities which are obligated to provide healthcare for all inmates. Medical costs in state run facilities therefore are $2.44 a day more for state facilities, a third more than in private ones.

The benefits of private prisons, therefore, are doubtful. But more than that, there is the constant danger of massive conflict of interest in a situation where corruption is eminently plausible – add this to the already existing problem of lobbying by big corporations and it seems as though this is a recipe for disaster. Privatisation may have benefits but in an industry like this, there is hardly one less suited. Indeed there is no greater conflict of interest than allowing companies that profit from incarcerating law breakers to influence law makers.




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