Private Prisons Profit From Taxpayer Dollars

Private prisons

Despite debates about whether or not it has benefitted America, the war on drugs has profited private prisons with taxpayer dollars. The private prison practices a business model that incorporates ideas from real estate, hotel management, and the leasing of manual labor. Their presence is felt in Washington, through lobbying efforts designed to create a vast body of criminals to be exploited for commercial profit.

The for profit prison was introduced as a way to save federal dollars, by transferring the management of correction facilities, from the weighted bureaucracy of government, to the more efficient private sector. In 1984, Hamilton County, Tennessee, awarded Correction Corporation of America (CCA) a contract to run their facility, thus ushering in the era of private prisons. Despite the corporation’s failed subsequent bid to take over all the prisons in the state, it has since expanded into various regions of the country and, at the time of this writing, trades on the NYSE at a price of $33.00.

In order for the private prison concept to work, there needs to be prisoners, more prisoners than the government feels comfortable managing. The for profit prison then offers to take on that extra burden. During the 1980s, the prison population began to multiply, courtesy of the war on drugs. Today, more than half of federal inmates today are in prison on drug charges. As of 2012, the US housed 760 prisoners per 100,000 citizens. Compare that to Mexico with 208 per 100,000 or Brazil with 242 per 100,000. Great Britain, with one of the highest prisoner populations in Europe, has 152 per 100,000.

Another source of human inventory comes from undocumented aliens, or immigrants. Within ten years the number of detained illegal immigrants jumped from 3,000 to 23,000, and their associated contract values from $760 million to $5.1 billion. Immigrants make up about one-half of the revenue of private prisons, not because the population of detained immigrants even approximates that of imprisoned drug offenders, but because virtually the whole of the immigrant market is outsourced.

As if this weren’t enough, private prisons maintain a strong lobby presence in Washington that push for more laws that create criminals.

But, as time progresses, the reality of private prisons suggests that they may actually be exacting a greater toll on the government by not carrying their fair share of the weight. The rallying cry of the private sector is efficiency through cost cutting. But when those costs are transferred back to government the only beneficiaries are the stockholders of private prisons, collecting their profits in taxpayer dollars.

For one thing, the inmates in private prisons include the less violent criminals while those requiring maximum security find their way into the federal facilities. This means less security costs for the privates. In fact, CCA is currently under a fraud investigation by the state of Idaho for allegedly understaffing the Idaho Correctional Center which they have managed for over a decade, while covering up this fact in reports issued to the state. The investigation follows a lawsuit by inmates who claim that CCAs understaffing resulted in a gang attack where prisoners were beaten and stabbed.

Another way privates may turf financial burden back on government is by accepting only those prisoners with potentially low health care costs. A graduate student study out of the University of California, Berkley, found that the private prisons housed a significantly greater portion of younger, healthier inmates than its state-run counterpart.

Other practices of private prisons include contracting out cheap prison labor to large corporations such as McDonald’s at a fraction of the cost of minimum wage workers, to the dismay of potential competitors unable to offer comparable bids.

But perhaps the most nefarious methods involve contract stipulations that require governments to guarantee a specified quota of prisoners or pay penalties for failure to do so. The practice of aggressive prisoner recruitment by private prisons gained notoriety in 2011, when Judge Mark Ciavarella Jr. was convicted of taking bribes in return for supplying a private youth detention center with fodder from his courtroom.

Private prisons have fallen so much out of favor that even their stockholders may soon fall out of love. The squandering of taxpayer dollars into the pockets of for profit private prisons has everybody’s attention.

By Robert Wisnewski


Yahoo Finance




Federal Bureau of Prisons


The Washington Times