Why the Private Prison Industry is About so Much More Than Prisons
David Dayen reports at TPM:
Nowhere has the outsourcing of public functions to private companies been more systematic than in the criminal justice system. It’s so pervasive that the phrase we use to describe the industry – “private prison companies” – is far too limiting to accurately depict the situation.
Actual housing of convicts in prisons and jails is only one part–perhaps the smallest part–of the overall industry revenue stream. Private companies seek to pull profits from the moment someone is suspected of a crime to the final day they meet with a parole officer. Private industry transports prisoners, operates prison bank accounts, sells prescription drugs, prepares inmate food, and manages health care, prison phone and computer time. And that’s just the start. The money comes from the taxpayer, in state and federal contracts, and the suspects, inmates, and parolees themselves, in fees and add-ons. Those caught in the web represent what marketers would call the ultimate “captive audience”: there is no way to shop around for a better deal.
“We’ve created a system to squeeze everything we can out of people, the vast majority of whom are poor,” said Alex Friedmann, activist and publisher of Prison Legal News.
Corporate financial incentives to shuttle people into the criminal justice system may seem to conflict with intensifying bipartisan concerns around America’s role as the most incarcerated nation on earth. But private prison companies can prosper whether the incarceration rate expands or lowers, by controlling the other ends of the pipeline, from pre-trial supervision to post-prison re-entry. The greatest source of profits now comes from federal contracts to detain, transfer, and deport undocumented immigrants. The more toxic the immigration debate becomes, the more advantage for-profit corporations take.
Delivering poor services at a premium price is part of the marketing strategy, says Matt Nelson, managing director of the immigration rights group Presente. “They know that cutting costs, services and training for guards increases recidivism,” Nelson said. “They’re familiar that if you have horrible conditions, people stay in the system longer. They know that the younger you incarcerate, it’s more likely they will stay in the system. They keep customers coming back.”
The Walnut Street Prison in Philadelphia was the first state penitentiary in America. It was a private prison administered by local Quakers, who sought to rescue inmates from the chaotic misery of public jails. Despite good intentions, the Quakers invented the concept of solitary confinement, so prisoners could quietly reflect on their crimes.
In the 1820s prisons shifted to the Auburn system (named after a small prison in Auburn, New York), where inmates worked 10-hour days as a means to build values. Southern states expanded this into the convict lease system, renting inmates to private companies for hard labor like coal mining or railroad building. This was a way to extend slavery after emancipation: the majority of all convicts leased were African-American. And it was lucrative for the states: In 1898, nearly three-fourths of Alabama’s entire state revenue came from convict leasing.
But mortality rates were shockingly high, with secret graves often kept at workplace sites. Eventually, the dismal conditions, periodic rebellions, habitual violations of the contract terms by the companies, and resulting public discomfort pushed convict leasing out of favor. Alabama was the last state to formally ban the practice, in 1928.
Private companies seeking to exploit the criminal justice system for profit shifted to a model of winning contracts to run non-prison facilities previously administered by the state, like juvenile centers, probation operations, and even immigrant detention. The return to managing prisons sprung from simple supply and demand. “If you look at incarceration numbers in the United States,” said Alex Friedmann, “it trundles along at 200,000 [per year] until the late 1970s, then skyrockets on a trajectory similar to a jet plane taking off from an aircraft carrier.”There were a lot of reasons for this: the Reagan-era war on drugs, extended sentences as a backlash to increases in crime, the removal of the federal parole system in 1987. But spikes in the prison population led to a severe bed shortage, with dozens of states sued for overcrowding and substandard conditions.
Building on their lower-security operations, private companies offered to finance prison construction and then bid on contracts to bring prisoners into their own facilities. By owning the prison, the companies secured leverage, since governments cannot replace the contractor without finding another facility to send the inmates.
The Reagan administration welcomed this. The 1988 Report of the President’s Commission on Privatization suggested that contracting out prisons at the local, state, and federal level “could lead to improved, more efficient operation.” Conservative think tanks like the Heritage Foundationstressed cost savings from free market competition. While government ran prisons at that time for around $40 per inmate per day, private prison companies could bid $25–$30.
But for a private prison company to meet that bid, operational costs had to be so low that “efficiency” quickly became mere corner-cutting. “There is good reason to think that… the challenge private prison contractors face — of running the prisons for less money than the state would otherwise pay without also bringing about a drop in the quality of prison conditions — cannot be met,” said Sharon Dolovich of UCLA School of Law in a Duke Law Journal study.
Competition withered quickly as well, narrowing to just two publicly traded companies: Corrections Corporation of America (CCA) and Geo Group, formerly known as Wackenhut Corrections Corporation. By the mid-1990s, these two controlled 75 percent of the private prison market, and between 2012 and 2014, they earned $653 million and $434 million in profits, respectively. . .