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America's Private-Prison Industry Has Always Been All Right

President Donald Trump has restored consumer confidence in private prisons—but they were never in danger of failing to begin with.

by Rick Paulas

For the country's largest private prison corporation, the last six months at the stock market have been wilder than the prison fight scene in Face/Off.

Last year, on August 17th, stock prices in CoreCivic—previously known as the Corrections Corporation of America—were steady at 27.22 a share. The next day, after former president Barack Obama's attorney general issued a memo directing the Department of Justice to phase out its use of private prisons, stocks plummeted 10 points. When Donald Trump won the presidency, stocks jumped six points and continued an upward trajectory, topping out at 35.03 on February 24th, the day after new Attorney General Jeff Sessions rescinded the 2016 directive.

Consumers' new confidence in private prisons' finances shouldn't come as a surprise: Trump has broadly hinted since his candidacy that he intends to use plenty of prison space with promises to bring back "law and order" and also deport three million people—who would first need to be detained. Though crime rates have largely declined since 1992, Americans' concern about crime and violence rose 14 percent between 2014 and 2016, according to Gallup—some may believe more people need to be incarcerated.

But while Trump's campaign rhetoric about crime being "out of control" may have been more about appealing to contemporary fears than responding to a real problem, the truth is, even in the Obama era, private prisons were never in danger of closing.

The American private prison industry originally gained traction in 1825, when the state of Kentucky—which was reportedly tired of running an expensive prison—leased its entire prison population and labor to an entrepreneurial contractor named Joel Scott for $1,000 (and one half of his net profits). Though Scott eventually built his own 250-bed prison to house his workers, he made his initial investment many times over by farming out their labor to build roads and canals to the west. While there are no records of how much Scott made in profits from this endeavor, there was "intense competition" to take over his business once he retired, Malcolm M. Feeley wrote in an essay in the 1991 book Privatization and Its Alternatives.

The model, moreover, caught on quickly: In 1844, Louisiana sold its Baton Rouge State Penitentiary prison labor force to private contractors for $50,000 a year. In 1866, Tennessee prisoners were contracted out to a furniture company for 43 cents a day per prisoner; a typical wage for a laborer at the time was likely more than double that.

The use of private prisons to house state prisoners was reined in by Franklin D. Roosevelt but sprung back to life under Ronald Reagan. Following Bill Clinton's contradictory campaign promises to both slash the federal budget and house more prisoners, the government privatized some low-security federal prisons and detention centers and advocated for the Department of Justice to incarcerate minimum-security prisoners and illegal immigrants in private prisons.

Even the Obama-era Department of Justice directive's ideal effect on the for-profit prison industry would have been negligible. For one thing, the 2016 order only applied to Department of Justice contracts. "The directive [was] not inclusive of state and local jurisdictions, or of other federal agencies, including Immigration and Customs Enforcement—the government body that relies most heavily on [private prisons]—or the U.S. Marshal Service," Christopher Petrella, a lecturer at Bates College who specializes in private prisons, wrote in an email. "The announcement was more symbolic than substantive."

The order was intended to apply to only 22,000 of the 2.2 million people in prison in the United States, or 1 percent. Moreover, a few days before the announcement, the Obama administration awarded CoreCivic a no-bid contract valued at $1 billion over four years. It pays the company $20 million a month, regardless of how many federal prisoners it is tasked with housing at any one time.

In fact, scan the differences between political parties, and there's currently not much of a difference in policy efforts to reduce the U.S.'s number of private prisons. Former Democratic presidential candidate Hillary Clinton talked about cutting federal partnerships, while Trump's administration wants to increase those partnerships, but they constitute a relatively small portion of private prison earnings anyway. No one's messing with state prisoners held in private facilities: In 2014, that number was 91,244, nearly 7 percent of the state prison population.

The reason why the states' use of private prisons is left well enough alone is what you'd expect says Byron E. Price, a professor of public administration at the City University of New York in Brooklyn and the author of Merchandizing Prisoners: Who Really Pays for Prison Privatization. "Private prisons are sewn into economic development," Price says. "If private prisons go away, a lot of people lose their jobs. In that respect, I don't think it matters who's in office."

Private prisons are run like corporations and try to make as much money as possible, Price says. Food portions are cut to a minimum, prisoners are crammed in as tightly as possible, guards work long hours for little pay. "[Private prisons] set up in states that aren't unionized, so they pay lower wages," Price says. "And so, people get less training."

When costs are cut in prisons, the effects can be dangerous. A 2016 Department of Justice investigation into a deadly riot at a CoreCivic prison in Mississippi found that the prison had a single doctor, only four of 367 employees were fluent in Spanish despite the inmate population being predominantly Mexican, and that the staff was counted on an hours-worked basis, which the investigators deemed "inappropriate" because it wasn't in line with Bureau of Prisons standards. A 2012 Department of Justice study found that there were 25 instances of inmate-on-inmate assaults (per 1,000 inmates) in public prisons, but that number jumped to 35 in private prisons. Private prisons' dangerous environments disproportionately affect people of color: One 2014 study found that they are "overrepresented in private prisons" in Arizona, California, and Texas.

If elections don't make a dent in ending private prisons, what could? The same action that might stop any for-profit company: Cutting off or restricting sources of its income.

In 2015, Columbia University became the first U.S. university to divest money from private prisons after a series of student protests; there are similar campaigns at the Massachusetts Institute of Technology and Princeton University currently underway.

But one often-overlooked point of divestiture is the general populace's role in boosting private prisons' profits—in other words, your role. "If we don't pay attention to our 401(k) plans, they can be invested in private prisons," Price says. So, if your plan invests in CXW (CoreCivic) or GEO (The GEO Group, the second largest private prison company in the U.S.), congratulations, you own a share of a private prison. Perhaps this is something you'd like to change.

This article was originally published by Pacific Standard on May 24, 2017; reprinted with permission from the author.