The Real Problem with Private Prisons. Hint: It’s Not the Lobbying.

Private prisons are a cancer. Private prisons make money by locking people up, and the more people they lock up for more time, the more money they make.

Private prisons are morally distasteful, they don’t save money, and they have historic performance problems. But they persist. Why does this cancer continue to grow?

The answer is not the lobbying or the political contributions — though the industry does both. The answer isn’t the contracts that guarantee 90% or 100% occupancy — though surely they help — or even the industry-financed research that purports to show cost savings when neutral research shows no such thing.

The answer is deeper than that and goes to the very heart of the industry.

Private prisons are filled because they are there. They succeed by being available. Companies build them, and the people come.

* * * * *

In the old days, prisons were major public works, built with public financing. To build a state prison (or a county jail) the jurisdiction would issue a bond. But issuing a bond typically requires voters’ permission. Voters would need to vote in favor of the bond issue — and it would compete for debt financing against schools, roads, parks and other public goods.

That’s the key. Voters might well respond to “tough on crime” as a political campaign — but when it comes to spending rare public money, they are more likely to prefer schools or transit. Bond financing is where that rubber hits the road.

Private prisons create an alternative path.

Just when prisons fill up and voter approval would be needed to build more.– Just as advocates propose lower sentences, “treatment not jail” or other reforms.– When growth looks unsustainable.–

— At that moment, in steps the private prison industry, offering empty prisons with plenty of space available.

Private prisons help the electorate avoid hard choices. Private prisons let elected officials escape balancing priorities. The prison is right there; just sign here.

The private prison companies built “on spec” in the 1990s, building without even a contract, speculating that public entities would fill them. Sadly, they were right. A brand new, already-built, private prison was hard to refuse.

Other paths were also forged. Companies like Goldman Sachs and Bank of America created “Lease Revenue Bonds” to finance traditional prisons. Sure, interest rates are higher and they cost more over the long run, but they don’t require pesky voter approval.

Of course private prison space came with promises of increased efficiency, improved performance and cost savings. The promises immediately proved not to be true, but that didn’t matter.

  • The Corrections Corporation of America (CCA) prison opened in Youngstown, Ohio, in 1997. Seven people died in the first year of operation. Twenty people were stabbed and six escaped, including two murderers.
  • Studies by the US GAO in 1996 and the US Attorney General in 1998 found no evidence that private corrections either reduced cost or raised performance quality. “Our analysis of the existing data does not support such an optimistic view,” concluded the AG review.

The same conclusion has been reached ever since. In my mind, the episode that should have killed the industry happened in 2010. Three inmates escaped from a private prison in Kingman, Arizona, kidnapped two tourists, killed them both and burned their bodies in their camper.

But that’s not the scary part. The scary part is the official review. State investigators found that the perimeter was left unmonitored for 15 minutes at the start of every shift, with only a single person monitoring the entire perimeter at the time of the escape; that there were so many false alarms (89 during the 16 hour study period) that staff learned to disregard them; that one-third of the security staff had less than three months on the job and that there was no officer training program.

Thus does our private sector reduce costs. By cutting corners. Nonetheless, with multi-million pay for executive staff and profits for shareholders, private prisons still don’t cost less than public ones.

Yet the industry lives on. Why? How?

First, some good news. Mass incarceration is running out of energy and prison populations are starting to shrink. Smart states close private prisons first, and public prisons only after the low-hanging fruit is picked. Both CCA and Geo stock have lost ground in 2015.

Now the bad news. The federal government wants to lock up immigrant detainees. The federal government lacks money and inclination to build anew — but the private sector has plenty of capacity. Indeed, as states cut back, more space becomes available.

— Just when advocates should have the upper hand against additional detention, private prisons still make it easy to lock people up. There’s plenty of space.

Bernie Sanders has introduced legislation to ban private prisons. Hillary Clinton told #BlackLivesMatter activists that she opposes them. I want people to know what they’re up against. Lobbyists and fundraising for sure. But also empty space. Nature abhors a vacuum.

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