Good Riddance, “Private” Prisons

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The Justice Department plans to end its use of private prisons after officials concluded the facilities are both less safe and less effective at providing correctional services than those run by the government.

“They simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’s Office of Inspector General, they do not maintain the same level of safety and security,” Yates wrote.

The Justice Department’s inspector general last week released a critical report concluding that privately operated facilities incurred more safety and security incidents than those run by the federal Bureau of Prisons. The private facilities, for example, had higher rates of assaults — both by inmates on other inmates and by inmates on staff — and had eight times as many contraband cellphones confiscated each year on average, according to the report. Yates said there are 13 privately run facilities under the Bureau of Prisons purview.

Source: Justice Department says it will end the use of private prisons  |  The Washington Post

Why, you ask, is a free market advocate in favor of ending private prisons?  Simple: because these facilities aren’t  “private” at all.

The reason why should be obvious.  Prisoners are their only “customer”, if you want to call them a customer at all; the “customers” are provided by the government, who pays private prison companies for their incarceration.  The only obligation to the customer that the prison has is to make sure he or she begins and ends their term in one piece. So the for-profit prisons themselves have every incentive to cut costs and cheat regulations, as this means more money to the shareholders’ bottom line.

What else makes private prisons so profitable? This should also be obvious – having as many facilities and customers as possible. They have every incentive to encourage laws that keep as many incarcerated as possible, as it increases their “customer” base. Moreover, they then sell the “labor” from prisoners to companies who source prison labor at bargain basement prices, increasing their margins even further.


So you should not be surprised at all to find out that private prisons are one of the leading lobbyists for continuing and expanding the war on drugs. They are not the only ones profiting from this – judges, police officers, lawyers… they and plenty of others all have huge incentives to keep locking people up, no matter the “offense”. A Pennsylvania judge was caught and sentenced to 28 years for taking bribes from for-profit juvenile detention centers to keep them full, even on petty offenses. This is only one example of someone who was actually caught and sentenced, and I find it hard to believe that more authority figures aren’t doing this exact same thing and getting away with it. As they say… “There is never one cockroach”.

Who was responsible for keeping private prisons in business? Our elected officials, of course, and there are no two more pertinent examples of profiteers than Marco Rubio and Hillary Clinton. Marco Rubio has received tens of thousands in donations from private prison companies and subsequently rewarded the firms with grants and appropriations in Senate bills. Hillary Clinton also took in a similar amount from the same companies, and contributed to their expansion during her tenure as both NY Senator and Secretary of State.


So why are private prisons being rolled down now? It is as easy as following the money – Hillary stopped accepting donations from for-profit prison companies last year, and promised to ban the use of private prison companies.  Given her current high probability of being elected President, it is plausible that Obama saw this becoming an initial focus of her administration, and decided to get in front of her and take the credit for it. She claimed to donate private prison funds to charity last year, but considering 96% of her donations went to the Clinton Foundation, her contributions do not exactly strike me as “charitable”. Since the Clintons run a pay-for-play political game, it is also plausible to believe they got their prison contributions from elsewhere.

But… who profits today? That’s simple – whichever member of Congress, shady banksters, or fat cat CEOs got tipped off of the impending decision, and got short or bought puts in Corrections Corporation of America (CXW) and/or the GEO Group (GEO), the two major for-profit prison stocks. Both took a monster nose-dive to their July 2012 levels as soon as the news was released.



We all know the CEOs and bankers will find some way to get away with this, but wasn’t congressional insider trading supposed to be stopped in 2012 with the STOCK Act? If you really believed that was going to stop our leaders from trading on inside information, I’ve got a bridge I want to sell you – Obama signed a bill reversing key pieces of the law just a few months later. I’d be particularly keen to see the trading records and cash values of the brokerage accounts of notorious scum inside traders Rep. Judy Chu and Senator Bob Corker, but they probably gave the tip to someone else and had them trade it for a kickback, since that would have been way too obvious.

Unfortunately, the problems of mass incarceration, exploitation of prison labor, and profiteering from the prison system will not be stopped with the closure of private prisons. It is obviously a step in the right direction, but the prison system is still massive and the war on drugs is what is imprisoning all the wrong (read: nonviolent) people committing trivial offenses. If this country is going to have a mass incarceration problem, it should be because we are locking up too many of our disingenuous leaders like Rep. Judy Chu and Senator Bob Corker, not for locking up a poor, underprivileged kid who got caught smoking weed on his porch for the fifth time, just for the purpose of selling his labor on the cheap to the awful corporations who are willing to use it.