Private Prisons Industry Explodes

The private prison industry is one of the fastest growing industries in the U.S. This year it has set its sights on California. In just ten years, the industry has grown thirty-fold, from owning 3,122 prison beds in 1987 to owning 85,201 at the end of 1996. It has tripled in size just since 1993. Private prisons will take in $1 billion this year. With California’s prisons bursting at the seams with non-violent offenders, victimless criminals, and geriatric cases, the major corporations in the private prison biz seem set to make millions.

In late July, Corrections Corporation of American (CCA), the largest private prison company in the United States, announced plans to build a $100 million, 2,000 bed prison in the Mojave Desert town of California City. CCA has no contract with the state to fill the prison, but is building the prison on speculation: Build it and they will come according to CCA supporter and state senator Richard Polanco of Los Angeles. David Myers, president of CCA, boasts that CCA has built prisons in other states on speculation and later persuaded governments to lock people in them.

While private prison corporations sell themselves as a cheap alternative to public imprisonment, their real function is to reap profits while frustrating public participation in the continuing incarceration boom. There is plenty of evidence showing that private prisons are actually more expensive than public prisons and that any alleged savings that do exist come from the fact that private prisons are contracted to hold low risk, easy to handle prisoners.

Private prisons aren’t cheaper

The 1,450 inmates already in 5 California private prisons are all minimum security, including many women and many low risk inmates in drug rehab. Rod Blonien, Sacramento lobbyist for Wackenhut Corrections Corp., the second largest private prison company in the US, predicts the state will use private prisons to store parole violators, women and geriatric inmates, and inmates with AIDS. A bill sponsored by Rep. Polanco which passed the California Senate and is pending in the House would require state officials to develop a plan by 1999 to place half of the state’s 10,000 women inmates into privately run facilities.

In Texas, which hosts one quarter of all private prisons beds and is the leader in prison privatization, private prisons get the best of the best of the state’s prison population, according to Allan Polunsky, who is chairman of the Texas Board of Criminal Justice which oversees prisons in Texas. I truthfully feel that it has not been an economic bonanza as suggested by the companies doing business with our state notes Polunsky.

A 1996 General Accounting Office study found that existing studies were too flawed to allow it to determine whether or not privatization saved money. But the GAO noted that a 1995 Tennessee study, the most sound of the reports it examined, showed that a private prison run by CCA was slightly more expensive per inmate per day than comparable public prisons. ($33.78 per inmate per day for CCA vs. $33.18 for the state prison.)

In New Mexico, CCA is charging the state $95 per inmate per day for holding women inmates, which is about double what the state pays for overflow space in county jails. New Mexico pays about $60 per inmate per day in its own women’s facilities. The state maintains that CCA has overcharged about $2 million over the last 8 years it has run the Grant women’s prison there.

Private Prison Speculation

The main reason the private prison industry is booming is that private corporations build prison capacity on speculation using private money. State governments, who can’t keep up with rising prison numbers caused by the War on Drugs and mandatory sentence laws are desperate for more space. And private prison construction doesn’t require a prison bond measure to win an election. California voters have defeated prison construction bonds in the last three elections. Nor do legislators have to vote to build more prisons. The California legislature refused to budget any money for prison construction this year, despite the fact that the Department of Corrections predicts it will run out of prison space by the year 2000 and a prison takes at least 3 years to build. California now spends $3.8 billion on its prison system.

After 20 years of massive growth in prison populations, voters are turning down more prison construction in state after state. Despite the fact that much of he public continues to be motivated by tough on crime hysteria, they don’t want their taxes to go up or services to go down. Private prison speculation allows continued spiraling imprisonment rates without a public debate about what crimes society really thinks should be punished by imprisonment.

For example, San Bernardino is considering contracting with a private prison corporation to replace its aging juvenile hall. San Bernardino has already allocated all of its available debt funding for the next 30 years for hospital construction and can’t afford the $100 million required to replace the 1950s era juvenile facility. Private corporations have approached San Bernardino and offered to finance construction themselves. On August 19, the Board of Supervisors voted to seek state legislature lifting the ban on privately run juvenile detention facilities.

Prison Boom

The rise of private prisons is a natural outgrowth of the United States’ insane prison policies over the last 20 years. The number of federal, state and local prisoners in the U.S. has tripled since 1980 and now stands at more than 1.7 million people. In California in 1980, there were 23,511 inmates in State prisons. By 1997, it was over 152,000, a more than 6 fold increase. Government prison construction has boomed, but has been unable to keep up with demand for prison space, even given the tens of billions of dollars spent.

An estimated 25 percent of the prison population, 425,000 nationally or about 38,000 people in California, are in for drug offenses. Many other inmates who make up today’s record prison populations are in for offenses related to the War on Drugs, which has caused a rise in violence, gangs and property crimes. The War on Drugs has attacked the supply of drugs, dramatically increasing the price and making the drug war the government’s largest crop subsidy program. With drugs in high demand, turf wars claim lives and drug users can’t pay for their drugs with legal means. Until the War on Drugs is replaced with harm reduction policies or otherwise modified, the demand for an ever increasing number of prison beds will continue, and private prisons will continue to flourish.

Other causes of the imprisonment boom, and the rise of private prisons, are mandatory sentencing laws, the abolition of parole on the Federal level and in most state systems, including California, and Three Strikes laws. All of these policies, intended to get tough on crime, have lengthened sentences and taken away judicial and correctional discretion in how long inmates stay in prison. This has led to an aging of the prison population. Inmates who might have received lighter sentences because of their age or who might have been paroled when they grew elderly or infirm are now held in prisons.

The Private Prison Lobby

There is no clear evidence so far that private prison companies have had a hand in lobbying for stricter sentencing policies or harsher drug laws which expand prison populations and therefore economically benefit private prison corporations. But it is only a matter of time. It is clear that private prison firms have spent a lot of money on lobbyists in every state in which they have been successful. In Tennessee, which is considering hiring a private prison company to own the entire state prison system, CCA helped write the legislation for the hand-over.

Texas, the king of prison privatization, has seen the lar
gest scandals associated with private prison corporation corruption, influence peddling and payoffs. In January, 1996, Andy Collins, the executive director of the Texas Department of Criminal Justice left the Department and immediately went into business working with its former suppliers. After a business associate of Collins was arrested for attempting to sell freedom to a Texas prison inmate for $750,000, information about numerous contracts the TDCJ had made with companies owned by Collins came to light.

In Louisiana, the East Carroll Parish Sheriff resigned on August 28 and pleaded guilty to federal charges, admitting that he had accepted $340,000 in bribes from a private prison firm there.

The biggest danger private prison corporations pose to democratic control is their ability to use the vast resources generated from private imprisonment in the political process. All the private prison corporations have a direct financial interest in enlarging the police state, passing new and harsher laws, and locking up an ever greater proportion of the population.

Interestingly enough, one of the few vocal critics of private prison corporations have been prison guards unions. This is ironic because in the past, the prison guards’ unions have supported policies that increase imprisonment and therefore benefit their membership. But one of the ways private prison corporations cut costs is by hiring non-union, minimally-paid labor–undercutting the unions’ strength. California unionized prison guards, members of the 25,000 strong California Correctional Peace Officers Association, earn starting salaries of $32,000 a year plus benefits. Union president Don Novey insists he isn’t worried about union membership declining, while he complains that public safety should not be for profit.

Ultimately, prison guards’ unions and private prison corporations may combine their efforts when they realize they have a common interest in increasing imprisonment. Both have considerable political influence and lots of money to spread around. In Tennessee, for example, CCA came to an agreement with the state AFL-CIO to allow collective bargaining for future private prison guard employees if the state privatizes its prisons. CCA therefore muted a significant critic of its plans.

Civil Rights Violations

National attention focused on the human rights standards maintained by private prison corporations after a videotape surfaced in August showing inmates being beaten, kicked and bitten by dogs at a privately run county jail in Brazoria County, Texas. In addition to the beatings depicted in Brazoria County, there have been beatings or other human rights violations of inmates at private prisons in Youngstown, Ohio, Holdenvill, Oklahoma and Eagle Mountain, California.

Evidence is mounting that private prison corporations hire supervisory staff and guards who were known rights violators at public prisons. The president of CCA, David Myers, was accused of encouraging guards to assault inmates when he worked as a state prison warden in Texas prior to joining CCA. Guards under his command raided a rioting cellblock and then beat, subdued, and handcuffed inmates with riot batons.

Two other Texas prison officials who were punished for brutality against inmates now work as wardens of CCA private prisons in Texas. Sanders E. Estes, a warden at CCA’s Venus correctional facility, punched and kicked an inmate in an office while he was a captain at the state’s Ellis Unit. Joe Driskell, a warden at CCA’s Liberty County correctional facility, beat an inmate who had forged his name on a commissary slip when he was an assistant warden at Texas’ Eastham Unit.

And two guards accused of abuses at the Brazoria County Detention Center, Wilton Wallace and Daryl French, were fired and pleaded guilty to federal crimes relating to prisoner abuse in public Texas prisons in the 1980s.

With private prisons freer from public scrutiny than public prisons, which are hardly open to the press, the potential for inmate abuse and human rights violations are immense. And the profit motive encourages less training for guards and lowers standards in hiring and background checks.

Private Prisons = Big Profits

Private prison corporations have been phenomenally successful because of the boom in private prison construction. Almost 20 private corporations own or manage 120 private prisons in 26 states and Puerto Rico.

CCA, the industry leader, has 50 prisons in 18 states. It took in $292 million dollars in 1996 and will take in much more this year. Its stock price has more than doubled since March and now stands at about $40 per share, up from $4 per share in 1994. The stock is trading at a premium of more than 50 times last year’s earnings, a ratio usually only obtained by the hottest high tech companies.

Wackenhut Corrections Corp. manages 37 prisons in North America, Europe and Australia with a total of more than 27,000 beds. It had revenue of $137.8 million in 1996. It went public at $4.50 in 1984 and now trades at $30 per share after reaching a high of $45 in 1996. Investors in CCA and Wackenhut are getting rich on the imprisonment of others.

The strong market positions of CCA, Wackenhut and other private prison companies are allowing them to plan for rapid future development. Experts expect that private prison corporations will add prison beds at a 35 percent annual rate of growth, 7 times the rate of publicly run prisons. By 2001, there could be almost 300,000 private prison beds in the U.S. alone.

In July, CCA started a Real Estate Investment Trust (REIT) to provide CCA with investment capital to build more prisons. The REIT, CCA Prison Realty Trust, sold stock on Wall Street to get money to buy an initial 9 facilities from CCA. CCA will operate the facilities and pay rent to the REIT. The sale price for the 9 facilities, $308.1 million, is money CCA can now use for speculation on more prisons, like the $100 million facility planned for California. Whenever CCA finishes building another prison, the REIT will buy it, giving the cash back to CCA for more expansion.

Wall street likes the REIT concept: the stock, sold in a private issue at $21 per share, opened on the New York Stock Exchange at $30 on July 15. Everyone who bought at the initial private issue price made an instant $9 per share profit.

Wackenhut is also considering starting a REIT. Investment devices such as REITs will allow the rapid growth private prison corporations are betting on. With such strong economic incentives to continue the spiraling private prison boom, and with most politicians still unable to discuss, much less enact, criminal justice reforms such as harm reduction to replace the war on drugs, the future looks bleak and private prisons look like they’re here to stay.

How weird can it get?

The private prison craze may be getting a NAFTA twist. Officials in the California Board of Prison Terms have announced a plan to build a privately run prison in Mexico to hold undocumented Mexican immigrants arrested in California. The proposed prison would be a maquiladora using slave prisoner labor. James Nielsen, chairman of the Board of Prison terms and the main supporter of the idea, would like to see the prison contain a factory modeled after California’s Prison Industries Authority. It would be built as an industrial enterprise that derived income. Nielson envisions that the products would only be sold in Mexico and abroad.

It lets individuals go to their homeland to serve out their sentences at a great costs savings, and justice prevails according to Don Novey, president of the California Correctional Peace Officers Association. The proposal envisions a prison capable of holding 2,000 to 4,000 inmates. The Board of Prison Terms has spent $17,000 on a study of the idea and Arizona officials are already negotiating with Mexico to get their own private prison in Mexico. Nielson propose
s a joint private prison in Mexico built for California, New Mexico. Arizona and the Federal government.

As of 1996, 19,000 Mexican nationals were imprisoned in California at a cost of $466 million per year. The number is expected to double by 2010 according to the Department of Corrections. The private prison factory idea gets rid of immigrants and yet still reaps the benefits of their labor, all while increasing the power of California’s criminal justice system.

There is another way

The rise of the private prison industry threatens to further erode public participation and grease the wheels of the imprisonment machine, making it easier to imprison a higher and higher portion of the population. Private prisons are worse for inmates, worse for employees, and don’t even save government money. And while you’ve read this article, an additional private prison bed has come on line.

Most of the private prison space is being built for people who shouldn’t even be in prison: AIDS patients, the elderly, non-violent, victimless criminals, drug offenders, parole violators.

The best way to fight private prisons is to fight the policies that are increasingly creating an enslaved, prison subclass. The War on Drugs and other over simplistic get tough on crime measures like Three Strikes need to be fought and overcome. There are viable alternatives to imprisonment for many non-violent, victimless offenders who are now sentenced to prison. Public pressure is the only way to turn the prison boom around and prevent the further expansion of private prison corporations.

For more information, contact the following organizations which favor criminal justice reform.

Families Against Mandatory Minimums (FAMM)
1612 K Street NW #1400
Washington, DC 20006

The National Prison Project
1875 Connecticut Avenue NW #410
Washington, DC 20009

National Drug Policy Foundation
4455 Connecticut Avenue, NW, Ste. B-500
Washington, DC 20008
(202) 537-5005.