Private Prisons: The Profits, Perils and Policy

In the US inmate populations in prisons have increased from less than 200,000 in the early 1970’s to over 2 million in 2008, driven in large part by the “War on Drugs”.    This has led to overcrowded prisons and a strain on budgets at both the state and federal level.  A primary way to address this issue has been contracting private firms for the incarceration and rehabilitation of inmates.  Private prisons were intended as solutions to address prison overcrowding without the government taking on the capital expenditures of building new facilities.  Instead, experience has shown that “the number of jailed criminals typically rises to fill whatever space is available”.

This phenomenon has been labeled the prison-industrial complex.  And the complex has not come without its cost, because the profit-based model is inherently opposed to the goals of effective inmate corrections.  The model encourages operators to cut expenses on necessary functions such as prison staffing, medical services and rehabilitation programs.  Also, because private prison companies generate revenue on a per-prisoner, per-day rate there is incentive to have high recidivism rates and long prison sentences.  This misaligned incentive is demonstrated through lobbying for harsher criminal sentencing, financial support of socially conservative lawmakers and offering limited rehabilitation programs.

Proponents argue that private firms are more efficient, yet studies have shown that private prison firms cost the same or more then their publicly run counterparts.  Yet somehow CCA and GEO Group, the two biggest players in the industry, are generating millions of dollars a year in profit.  How can this be?  Clearly the “savings” are coming from somewhere.

Read more about it here: White Paper


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