-----------KEEP FREE MEDIA FREE-----------

Private Prisons: Profits of Crime

By Phil Smith
from the Fall 1993 issue of Covert Action Quarterly

Private prisons are a symptom, a response by private capital
to the "opportunities" created by society's
temper tantrum approach
to the problem of criminality.

At Leavenworth, Kansas, within a perimeter of razor wire, armed prison guards in uniform supervise hundreds of medium- and maximum-security federal prisoners. Welcome to one of America's growth industries- private sector, for-profit prisons. Here in the shadow of the federally-run Fort Leavenworth Disciplinary Barracks and the Leavenworth Federal Penitentiary, the Corrections Corporation of America (CCA) runs a short-term detention facility for medium- and maximum-security prisoners. Under contract to the U.S. Marshal's Service and the Immigration and Naturalization Service (INS), the CCA Leavenworth facility is not an anomaly but part of a trend. In the last decade, from juvenile detention centers to county jails and work farms to state prison units to INS holding camps for undocumented aliens, private interests have entered the incarceration business in a big way. Where there are people detained, there are profits to be made.

Imprisonment is an ugly business under any regime, but the prospect of a privatized prison system raises difficult and disturbing questions beyond those associated with a solely state-operated prison system. It has been, after all, a common assumption that the criminalization and punishment of certain behaviors-the deprivation of physical liberty and even of life itself-are not amenable to private sector usurpation. Some of the arguments that inform this assumption are ethi cal, some legal, and others practical, but all are being chal lenged by a growing group of special interests.

Illustration by Eric Drooker

Prisons for Profit
Surprisingly, private prisons are nothing new in U.S. history. In the mid-1800s, penny-pinching state legislatures awarded contracts to private entrepreneurs to operate and manage Louisiana's first state prison, New York's Auburn and Sing Sing penitentiaries, and others. These institutions became models for entire sections of the nation where privatized prisons were the norm later in the century. These prisons were supposed to turn a profit for the state, or at least pay for themselves. Typically, privatization was limited: The state leased or contracted convict labor to private companies. In some cases, such as Texas, however, the corrections function was turned over wholesale to private interests which prom ised to control delinquents at no cost to the state. As the system spread, labor and businesses complained that using unpaid convict labor constituted "unfair" competition. Of equal concern to reformers-but of less weight to politicians-was the issue of prisoner abuse under the private corrections regime. Anecdotal evidence from across the country painted a grim picture: While state officials remained indifferent or were bought off by private interests, prisoners suffered malnourishment, frequent whippings, overwork and overcrowding. A series of investigations of state prisons confirmed the tales of horror and produced public outrage. l As with anti-trust legislation and the progressive reforms which followed, public pressure impelled government regulation of private sector abuse. By the turn of the century, concerted opposition from labor, business, and reformers forced the state to take direct responsibility for prisons, thus bringing the first era of private prisons to an end.

Three Trends Converge
But as the twentieth century stumbles to an end, the hard lessons of a hundred years ago have been drowned out by the clamor of free market ideologues. Again, privatization is encroaching ever further on what had been state responsibilities, and prison systems are the target of private interests. The shift to privatization coalesced in the mid-1980s when three trends converged: The ideological imperatives of the free market; the huge increase in the number of prisoners; and the concomitant increase in imprisonment costs. In the giddy atmosphere of the Reagan years, the argument for the superiority of free enterprise resonated profoundly. Only the fire departments seemed safe, as everything from municipal garbage services to Third World state enterprises went on sale. Proponents of privatized prisons put forward a simple case: The private sector can do it cheaper and more efficiently. This assortment of entrepreneurs, free market ideologues, cash-strapped public officials, and academics promised design and management innovations without re- ducing costs or sacrificing "quality of service." In any case, they noted correctly, public sector corrections systems are in a state of chronic failure by any measure, and no other politically or economically feasible solution is on the table.

More Prisoners, More Money This contemporary push to privatize corrections takes place against a socioeconomic background of severe and seemingly intractable crisis. Under the impetus of Reaganite social Darwinism, with its "toughness" on criminal offenders, pris on populations soared through the 1980s and into the 1990s, making the U.S. the unquestioned world leader in jailing its own populace. By 1990, 421 Americans out of every 100,000 were behind bars, easily outdistancing our closest competitors, South Africa and the then USSR. By 1992, the U.S. rate had climbed to 455. In human terms, the number of people in jails and prisons on any given day tops 1.2 million, up from fewer than 400,000 at the start of the Reagan era.

While incarceration statistics have skyrocketed, crime rates have increased much more slowly. In fact, from 1975 to 1985, the serious crime rate actually decreased by 1.42 per cent while the number of state and federal prisoners nearly doubled. The number of people sent to prison is actually determined by policy decisions and political expediency. Politicians of all stripes have sought cheap political points by being "tough on crime." They throw oil on the fire of public panic by portraying the urban underclass (read: young, black males) as predator. Ignoring the broad context of economic policies that have effectively abandoned large segments of the population, they have instituted mandatory minimum sentences, tighter or no parole schedules, and tougher "good time" regulations. Adding to the overpopulation these putative measures wrought, the War on Drugs-which aimed its frenzy at the inner city-stuffed the nation's already over crowded prisons with a large crop of mostly African-American and Latino nonviolent offenders. In state after state, budgets have been stretched to the breaking point by the cost of maintaining and expanding this massive correctional archipelago. In California, the nation's largest state prison system, the corrections budget increased seven-fold during the 1980s to $2.1 billion annually at the end of the decade-and the system was still operating at 180 percent of capacity. The huge costs associated with the choice to deal with social problems by mass imprisonment are a fundamental part of the drift toward private prisons. The converging trends (rampant free-marketism, higher prison population, and escalating costs) are part of a larger trend-the sharpening of Reaganite class war and the social meanness that accompanied it. The last time the U.S. faced such an influx of prisoners was after the Civil War when freed blacks, who were previously punished and controlled within the slave system, were sent to formerly all-white prisons. The present situation is not perfectly analogous, but once again, policy-makers faced with burgeoning and unruly minority resistance of their own making seem to have chosen a similar course: "Lock 'em up and throw away the key."

The Buslnes of Punishment
Punishment is not only a crucial and ever-larger state function, it is also big business. Private ownership and/or operation of prisons, while an increasingly significant part of the corrections system, represents only a fraction of the "prison-industrial complex." The cost of corrections-in cluding state, local, and federal corrections budgets-ran to more than $20 billion a year in the early 1990s. The cost of constructing enough cells just to keep up with the constant increase in prisoners is estimated at $6 billion a year. This figure does not address existing overcrowding, which is pandemic from city jails to federal prisons. The public sector imprisonment industry employs more than 50,000 guards, as well as additional tens of thousands of administrators, and health, education, and food service providers. Especially in rural communities where other employment is scarce, corrections assumes huge economic im portance as a growth industry which provides stable jobs.

The punishment juggernaut of the Reagan-Bush years also spawned an array of private enterprises locked in a parasitic embrace with the state. From architectural firms and construction companies, to drug treatment and food service contractors, to prison industries, to the whole gamut of equipment and hardware suppliers-steel doors, razor wire, communications systems, uniforms, etc.-the business of imprisonment boasts a powerful assortment of well-or ganized and well-represented vested interests. Privatized prisons, then, are not a quantum leap toward dismantling the state but simply an extension of the already significant private sector involvement in corrections. The public-private symbiotic relationship was well-established long before 1984, when CCA first contracted with the INS to operate detention centers for illegal aliens. With private firms already providing everything from health care to drug treatment, the private management of entire prisons was a natural progression, especially given the tenor of the times.

Prison Prlvateers
The growing private prisons industry-several dozen companies contracting with state entities to provide and/or operate jails or prisons-is oligopolistic in structure. CCA and Wackenhut Corrections Corporation dominate the upper tier, control more than half the industry's operations, and run 29 minimum- and medium-security facilities with more than 10,000 beds. Beneath the big two is a tier of lesser players: a cluster of smaller regional companies, such as Kentucky-based U.S. Corrections Corporation and Nashville-based Pricor; and small corrections divisions of international concerns, including construction giant Bechtel Corporation. The boom has created a shadier realm of speculators ready to turn a quick profit from the traffic in convicts. Compared to the big three, these smaller companies are undercapitalized, inexperienced, understaffed, and are more likely to fail eventually. Run by hucksters, fast-talking developers, and snake-oil salesmen, they sell for-profit prisons-disguised as economic development-to depressed rural communities desperate to bolster their budgets and local economies. The pitch is simple: Prisons are overcrowded! Build a prison and the prisoners will come to you! You'll reap the benefits in terms of jobs and increased tax revenues! Reality is a bit more complex. Quirks in the federal tax codes remove exemptions for prison bonds if more than ten percent of prisoners are out-of-state, if state prison officials are reluctant to have their prisoners housed out-of-state, or if large cities with severe overcrowding are unwilling or unable to pay to transport local prisoners hundreds of miles. In short in the trade in convict bodies, supply and demand don't always match. Prisons built on a speculative basis are a risky venture-at least for the towns or counties involved; the speculators take their money off the top.

Historically, this bottom tier has been the locus of most of the publicized problems and abuses. But although these bottom feeders attract "60 Minutes"-style scandal of banal corruption, it is in the top tiers that the most serious potential for abuse exists. Wackenhut, founded by former FBI of ficial George Wackenhut in 1954, is the largest and best known, as well as the oldest and most diversified. From its beginnings as a small, well-connected private security firm, Wackenhut has grown to a global security conglomerate with earnings of $630.3 million in 1992. Prison management is only the latest addition to its panoply of security and related services. When the Coral Gables, Florida-based firm first entered the prison business in 1987, it had one 250-bed INS detention center. It now operates 11 facilities in five states housing nearly 5,500 prisoners. Wackenhut maintains two medium security prisons in Australia and boasts of "prospects for additional facilities in the U.S., South America, Europe, and the Pacific Rim.'' While some of its competitors in the private repression industry have specialized-Pinkerton and Burns, for example, lead the "rent-a-cop" field-Wackenhut tries to cover all the bases. Its 1991 revenues reflect its corporate diversity: The private security division contributed 43 per cent; the international division, 22 percent; airport security services, 15 percent; contracts to guard nuclear installations and Department of Energy facilities, 10 percent; and, last but not least, private corrections contributed 10 percent. Given the high rate of return in its corrections division-10 percent compared to 1.8 percent overall-Wackenhut has indicated that it wants to see that area grow.

Corrections Corporation of America
Its closest rival is CCA, which despite its youth and small size compared to the Wackenhut empire, has emerged as the pioneer and the industry leader. But unlike Wackenhut, CCA -like the second tier companies such as Pricor, U.S. Corrections, Concepts, Inc., and Correction Management Af filiates-is almost completely dependent on private imprisonment for its revenues. Founded in 1983 by the investors behind Kentucky Fried Chicken, CCA used the sales skills of Nashville banker/ financier Doctor R. Crants and the political connections of former Tennessee Republican Party chair Tom Beasley- co-founders of the company-to win early contracts. The next year, CCA cut its first big deals: to operate INS detention centers in Houston and Laredo, and to run the Silverdale Workhouse (Hamilton County prison farm) in its home state, Tennessee. In the next nine years, CCA grew steadily to become the industry leader, with 21 detention facilities hous ing more than 6,000 prisoners in six states, the U.K., and Australia. Its profits are up by nearly 50 percent from its 1991 end-of-the-year figures.

Once number three behind CCA and Wackenhut, Pricor has taken a different tack from its competitors. It carved out a specialized niche within the private prison industry by convincing underused county jails in rural Texas that they could profit by accepting inmates from overcrowded national and statewide prisons. After cutting its corporate teeth on juvenile education and detention and halfway houses, expan sion into adult prisons must have seemed a natural step. In 1986, its first year of adult prison operations, Pricor opened minimum security detention facilities totaling 170 beds in Alabama and Virginia. By 1990, the company looked west to Texas, with its seemingly unending supply of prisoners and profits. Soon, it operated or had contracts pending for six 500-bed county "jails for hire," mainly in underbudgeted and underpopulated West Texas, and also with one 190-bed pre release center operated under contract with the Texas Department of Corrections. Although Pricor, fueled by its West Texas operations, posted fiscal 1991 revenues of more than $30 million for its adult corrections division, its Texas project was in shambles by mid-1992.

The Critiques ot Prison Prlvatlzatlon
Since the last round of prison privatization ended a century ago, a strong ethical and practical presumption has grown up that imprisonment should be solely a function of the state. The practical challenge centers around the material self interest of the various pro-privatization constituencies. There are two broad areas of concern: efficiency, i.e., can private operators be trusted to run prisons for less without sacrificing "quality of service"; and accountability, i.e., what oversight mechanisms will assure that society's interests come before those of the managing corporations. As to efficiency-leaving aside for a moment critical questions about what "efficiency" means in prison operations-three well-designed comparative studies found that private operators did run prisons more cheaply without sacrificing ''quality.'' Typically, the studies found, Wackenhut and CCA were able to provide cost savings of five to fifteen percent while still maintaining high marks for provision of services. Even in Texas, which has one of the lowest cost per prisoner rates, both Wackenhut and CCA came in cheaper. But what about "efficiency"? If the term means nothing more than the ability to house bodies cheaply while complying with minimal standards, then industry leaders, at least, appear to be efficient. Imprisonment, however, is generally acknowledged to include, at best, deterrence and rehabilita tion, or at least, reduction of recidivism rates. While there is no definitive private-public comparative study on recidivism, the private prisons, as opposed to the state, have a direct conflict of interest. By reducing the number of repeat offenders, they are in effect reducing the supply of profit producing "customers." It is in the material interest of these companies, therefore, to produce not prisoners who have "paid their debt to society," but ones who will continue to pay and pay on the installment plan. The question of accountability is a legal sinkhole. Under U.S. Iaw, the state is subject to constitutional restraints that do not apply to private entities. With prisoners' rights already under attack from Congress and the federal courts, and with ambiguous case law on private versus public liability, some legal scholars are worried. They fear that privatized prisons place inmates in a legal limbo-caught in a grey area between the state and the private sector-unable to hold either answerable for infringements of their constitutional rights. Another accountability issue concerns monitoring. The profit-motive could cause private operations to cut corners; leading to poor or unsafe conditions. Privatization proponents argue that regulation and careful state monitoring of compliance will sufficiently protect inmates, but that contention must come as cold comfort to prisoners who have already felt the tender mercies of the state. The record so far, however, shows that compared to the murderous outbreaks in state penitentiaries, incidents of violence, riot, escape and the like have been relatively rare in the private prisons. Direct comparisons are problematic, however, as CCA's Leaven worth facility opened in 1992, is the first, and so far only, private sector institution to handle maximum-security inmates as its primary function.

Doing Well Beats Dolng Good
Aside from practical issues of superficially defined performance, there is the fundamental ethical question involved in farming out the repressive functions of the state to private interests: Should we, as a society, shift responsibility for the ultimate sanction by which we measure normative behavior to those whose motive is profit? The deep philosophical issue is perhaps unanswerable, but the ramifications are disturbing.

Imagine a full-fledged corporate public relations campaign designed to whip up crime hysteria in order to increase profits.
The most worrisome aspect of prison privatization is the inevitable emergence of a private "prison lobby" concerned not with social welfare but with increasing its dividends, not with doing good, but with doing well. Sentencing guidelines, parole rules, corrections budgets, and new criminal legislation are areas in which private prison operators have a vested interest and could influence policy decisions. They could also benefit by manipulating public fear of crime. Unlike most other public policy arenas, criminal justice policy is largely determined not by the realities of crime but by its perception. That the fear of crime is exploited by politicians and "reality television" programming is a truism; but imagine a full-fledged corporate public relations campaign designed to whip up crime hysteria in order to increase profits.

"Prisons Are Built with Stones of Law..."
The practical arguments of prisoncrats and academics, as well as the more abstract philosophical and humanitarian objections of liberal critics, betray a certain myopic view of the problem and thus of its solutions. To accept the current parameters of debate within the criminal justice community is to beg some questions not only about the role of private enterprise in corrections, but also and more fundamentally, about the relationship between state and citizen (or alien) and the function of imprisonment in contemporary America. By any criteria for cost-benefit analysis, crime and corrections policy in the U.S. is a dismal failure. Prisons neither deter nor rehabilitate, nor do punishment variables seem to have any impact on crime. Granted, imprisonment does incapacitate and discipline offenders, but only while they remain behind bars-and only a minuscule minority of prisoners do not one day return to society. Prisons form a very narrow platform from which to alter behavior that is shaped by myriad factors, but these institutions, and the criminal justice system as a whole, are charged with precisely that task. Given the failure of corrections to achieve its stated goals, however, it is appropriate to ask whether imprisonment serves other, latent functions and what these functions might be. One role that imprisonment clearly fulfills is that of taking symbolic action against socially defined deviants. It seems to matter less that prisons stop crime than that they give the appearance of doing so--or of doing something. In a society unable or unwilling to address the fundamental social and economic causes of criminality, this symbolic action substitutes for substantive reform. Imprisonment also serves to demonstrate the disciplinary power of the state. In Michel Foucault's view, the prison is the model, the point of origin, for the entire model of social control that characterizes industrialized societies. Incarceration is at one end of a sliding scale of socially imposed surveillance and discipline. After two centuries of wide spread acceptance, its place on the continuum is distinguished mainly by the degree of day-to-day control and the physicality of its bars. The scale of control, in less extreme and visible form, however, extends throughout the institutions of society. As for the privatization of prisons, that industry, while a deeply disturbing phenomenon, is not the fundamental problem. Private prisons are a symptom, a response by private capital to the "opportunities" created by society's temper tantrum approach to the problem of criminality in the context of free-market supremacy. Dostoevsky once remarked that he measured the quality of a society by the quality of its prisons. In the present case it may be as appropriate to judge us by their quantity, too. In either case, the judgment would be harsh indeed.

Illustration by Eric Drooker

CAQ Contents   Subscribe to CAQ   MediaFilter   PoMoWar