The Wrongologist

What’s
Wrong Today:

In 2012, Corrections Corporation
of America (CCA), the largest for-profit private prison company in the country
sent a letter to 48 state governors offering to buy their public prisons. CCA
offered to buy and operate a state’s prison in exchange for a 20-year contract,
which would include a 90% occupancy rate guarantee for the entire term. This
information comes from a report by In
The Public Interest (ITPI): How
Lock-up Quotas and “Low Crime Taxes” Guarantee Profits for Private Prison
Corporations.

Essentially, any state that signed on would have to guarantee that its
prison would be 90% filled for the next 20 years (a quota), or pay the company
for unused prison beds if the number of inmates dipped below 90% of capacity at
any point during the contract term. While no state took up CCA on its offer,
many states already pay these occupancy guarantees in their prison privatization
contracts.

This is a kind of tax that penalizes taxpayers when the desirable
social goal of lower crime is achieved, since lower crime translates into smaller
prison populations.

The poster boys
of domestic government prison outsourcing are the Corrections
Corporation of America (CCA), The GEO Group (GEO) and Management & Training Corp (MTC). The HuffPo
provided this map of the locations of prisons with lock up quotas:

These
contracts are another example of elected officials and state employees being out
negotiated by corporate smart guys. Bed
occupancy guarantees shift the risk from the private sector to the taxpayers. The
big idea used by the private firm is to tell the state’s negotiator that they can
lower the per-prisoner annual cost to the state (or county, or town) if the
government entity can guarantee a minimum number of inmates or inmate-nights to
the operator of the prison.

So the incentive driven by these contract
clauses is full prison beds. And doesn’t America have the highest incarceration rate in the world?

The private prison industry often
claims that prison privatization saves states money. The report states that
many studies and audits have shown these claims to be illusory, and bed
occupancy requirements are mainly a way that private prison companies can lock
in profits after the contract is signed. Some findings in the report:

• 65% of
  the private prison contracts that ITPI analyzed included occupancy guarantees
  in the form of quotas or required payments for empty prison cells.

• Occupancy
  guarantee clauses in private prison contracts range between 80% and 100%, with
  90% as the most frequent occupancy guarantee requirement.

• Arizona,
  Louisiana, Oklahoma and Virginia are locked into contracts with the highest
  occupancy guarantee requirements, with all quotas requiring between 95% and
  100% occupancy.

These deals create many kinds of moral hazard. In March, the Wrongologist described
a 2008 “kids for cash” scandal in Wilkes-Barre, PA, in which two juvenile court
justices were convicted of taking bribes from a local private prison company,
which kept its facilities full of teenagers steamrolled through the court
system. The judges were notorious for imposing lengthy jail sentences on teens
for minor, first-time offenses, often after the defendants unknowingly waived
their right to counsel.

Is this
just the occasional and inevitable corruption, or, the for-profit gaming of a
broken social system in the name of a privatized world?

Can we
privatize a service without it becoming a crony capitalist sweetheart deal?

A 2011 report by the Justice Policy Institute found that
private prison companies lobby hard for harsher sentencing laws. Steve Owen, a
spokesman for CCA, the nation’s largest private prison company, said to the Shreveport
Times that the occupancy requirements “are necessary for a
feasible business model.”

But
government shouldn’t be in the business of keeping an unsustainable industry
afloat. And yet that’s just what they’ve been doing. Leslie Berestein reported for the San
Diego Union-Tribune that the country’s leading private prison firms
– CCA, GEO and MTC lobbied lawmakers to pass harsh new immigration laws,
including changes “in the way that immigrant detainees – illegal immigrants,
asylum-seekers, legal residents appealing deportation and others – are held.”

“The
private prison industry was on the verge of bankruptcy in the late 1990s, until
the feds bailed them out with the immigration-detention contracts,” said
Michele Deitch, an expert on prison privatization with the Lyndon B. Johnson
School of Public Affairs at the University of Texas in Austin.

And who
drafts these tough laws for state houses across America? The American Legislative
Exchange Council (ALEC). Remember ALEC? It is a national organization that provides
state lawmakers, more than 2,000 of whom are members of ALEC, with draft
legislation written by corporations and special-interest groups. Would
it surprise you that ALEC’s corporate members include both the Corrections
Corporation of America and the GEO Group?

When Arizona
passed its anti-immigrant law in 2008, a law guaranteed to
increase jail populations, the template for their law was written by ALEC.

With ALEC’s
help, a once dying business has been transformed into a multibillion-dollar
industry with record revenue and stock prices several times higher than they
were eight years ago. They are now a $5.1 billion industry, with virtually no
risk – the risk instead is borne by American taxpayers.

More moral
hazard: According to Aviva Shen, the private prison industry spent $45 million
on immigration lobbying alone.

The
push to privatize everything from education, to water rights, to social
security, is not about quality, or outcome, or even the greater good; it is
about profit and control of resources. In the end, privatization can lead to
monopolization and price manipulation.

The
public good, civil liberties, equality, and justice ultimately decline for the
people that can no longer afford the services. When we hear “The
government can’t do anything right”, that’s a bought and paid for
speech spread by those who benefit from rerouting taxpayer dollars to private corporations.

It’s easy to forget at this great distance that our country’s greatest
success was due to a collaborative effort in the years during and after World
War II, when advances in manufacturing and technology made us the strongest
economy the world had ever seen. It was a shared success. The common good was
not for sale.

Privatize the
taxpayers’ money. Tear down the commons. Taxpayers take the risk, corporatists take
the rewards.

Corporations are not
people. People are capable of patriotism.