Thursday, December 17, 2009
Pushing the Prison-Industrial Complex
"America has 5% of the planet's population, but 25% of its prisoners. ... Cash-strapped states seeking to cut the cost of housing inmates are mulling drastic measures, ranging from quicker paroles to earlier releases. ... The grim share prices dwell too much on states' stop-gap attempts to curb incarceration costs, and overlook private prisons' steady profitability, their stranglehold on a tough-to-penetrate industry and the widening chasm between supply and demand. In an extensive recent report, Barclay's analyst Manay Patnaik pegs the annual demand for new prison beds at 35,000. That's being met by a supply of just 20,000 from both the public and private sectors. Patnaik's conclusion: 'It's an imbalance that works in favor of private-prison operators.' ... Investors in the triad of Corrections Corp. of America (or CCA), Geo Group and Cornell have other perks: Private prisons earn recurring revenue, impervious to seasons or business cycles. They build decades-long ties with a fairly reliable customer--the government, be it state or federal. And if the customer is the feds, ther companies are selling to a client that doesn't even have to balance the budget and can print money at will. ... A long stay in prison, according to an industry joke, cures very little except heterosexuality. Yet out prison population has more than tripled over the past quarter-century, jumping from roughly 700,000 in 1984 to 2.38 million this year, the fastest pace of any country on earth. ... A significant reduction of the US incarceation rate, the highest in the world, would rattle private prisons", my emphasis, Kopin Tan at Barron's, 19 October 2009, link:
This industry is a disaster waiting to happen. As states run out of money they will cut their incarceration rates. Before closing state prisons, they will end contracts with privately owned ones no matter how much the triad claims they can save states money.