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Article Excerpt
Introduction
THE EXPANDING PRIVATE PRISON INDUSTRY IS A CONTEMPORARY EXAMPLE OF COERCIVE social control that is driven by neoliberal economic policies and activities residing outside the conventional boundaries of criminal justice (Coyle et al., 2003; Jones and Newburn, 2005; Nathan, 2004). Among the clearest trends in the growth of private prisons is the increased involvement of an array of financial and corporate actors that pave the way for greater penal profit. "Recognizing an opportunity to make fortunes off the backs of prisoners and their families, Corporate America--including architects, bankers, building contractors, and telephone companies--lined up at the prison trough" (Pranis, 2003: 156). Indeed, private prison companies attract large investments that enable them to construct additional facilities that further widen their markets, aware that the supply of raw materials--prisoners--is likely to remain abundant into the foreseeable future (Adamson, 1984; Downes, 2001; Welch, 2003).
This article sets out to contribute to a critical understanding of prison privatization by tracking the flow of capital that supports the economic infrastructure vital for its expansion. In a manner of speaking, the project heeds the advice of "Deep Throat," the principal informant in the Watergate scandal, who advised investigative journalists Woodward and Bernstein to follow the money. While shedding light on the extent of corporate investment and institutional stockholdings, the analysis also turns attention to evidence of modern transportation in which prisoners are transferred across state lines solely to occupy cells in private prisons and detention facilities. A new geography of shipping convicts exposes further the larger phenomenon of prison profiteering. Given the prevailing neoliberal economic forces, the discussion addresses political and demographic implications of social inequality, exacerbated by a growing correctional apparatus (see Christie, 1994; Greene, 2002; Parenti, 2003).
"Correcting" the Economy
Imprisonment has become big business, and the bitter "not-in-my-backyard" attacks on prisons have been replaced with proud proclamations, such as the sign in Canon City, Colorado, reading "Corrections Capital of the World." The mayor of Canon City boasts, "We have a nice, nonpolluting, recession-proof industry here" (Brooke, 1997: 20). In Leavenworth, Kansas, a community that recently added a private prison to an already extensive corrections system that features a federal penitentiary, a state prison, and a military stockade, a billboard quips "How about doin' some TIME in Leavenworth?" Bud Parmer, site acquisition administrator for the Florida Department of Corrections conceded, "There's a new attitude ... small counties want a shot in the arm economically. A prison is a quick way to do it" (Glamser, 1996: 3A). Economically strapped towns induce jail and prison construction by offering land, cash incentives, and cut-rate deals on utilities; in return for these accommodations, locals receive jobs and spurs to other businesses such as department stores, fast-food chains, and motels, all of which contribute to the tax base (see Kilborn, 2001; Martin, 2000; Thies, 2001).
Whereas prisons are tightly courted on Main Street, on Wall Street the larger corrections industry has created a bull market--further evidence that crime does indeed pay. Tremendous growth in the prison population, coupled with astonishing increases in expenditures, has generated a lucrative market economy with seemingly unlimited opportunities for an array of financial players: entrepreneurs, lenders, investors, contractors, vendors, and service providers. In 2000, the World Research Group and the Reason Foundation hosted their Fifth Privatizing Correctional Facilities conference in San Antonio, Texas, under the banner "Grow Profits and Maximize Investment Opportunities in This Explosive Industry." Without much hesitation, corporate America has caught the scent of new public money. The Dallas meeting included representatives from AT&T, Merrill Lynch, Price Waterhouse, and other golden logo companies. The prison industry also has attracted other capitalist heavyweights, including the investment houses of Goldman Sachs and Salomon Smith Barney, who compete to underwrite corrections construction with tax-exempt bonds that do not require voter approval. Defense industry titans Westinghouse Electric, Alliant Techsystems, Inc., and GDE Systems, Inc. (a division of the old General Dynamics) also have entered the financial sphere of criminal justice, not to mention manufacturers of name-brand products currently cashing in on the spending frenzy in corrections. While attending the American Correctional Association's annual meeting, Rod Ryan, representing Dial Corporation, boasted: "I already sell $100,000 a year of Dial soap to the New York City jails. Just think what a state like Texas would be worth" (Elvin, 1994/1995: 4).
Nowadays, an operative word for describing corrections in a free-market economy is privatization. Although private financial interests have shaped the course of criminal justice throughout modern history (Spitzer and Scull, 1977a, b), the recent wave of commercialization and profiteering is traced to the Reagan revolution of the early 1980s. At that time, the prevailing political and economic philosophies encouraged government officials to turn to the private sector to administer public services, such as sanitation, health care, security, fire protection, and education. It was believed that the application of free-market principles to public services would enable private corporations to compete against each other to provide the best service at the lowest cost. In that context, the privatization of prisons was introduced as a new and novel approach to some old correctional problems, most notably, overcrowding and mounting costs. Judith Greene, a policy analyst, summarizes the phenomenon:
The private prison industry emerged in the U.S. amid a rising tide of neo- liberal free market economic ideas and neo-conservative zeal for moralistic discipline that propelled the country's criminal justice through a series of campaigns to "get tough on crime." Reagan administration officials' ardor for mandatory prison sentences and zero-tolerance approaches to crime control and drug enforcement launched a national crusade to "take back" criminal justice policies and practices from the hands of the supposedly liberal elite of criminologists and a defense-oriented legal establishment. The rapid embrace of their ideas by the public sent prison population levels shooting through the roof (2003: 56; see Sinden, 2003).
The scope of privatization continues to sprawl, reaching beyond facilities that are owned and operated by private companies. Most correctional institutions use some form of privatization in areas such as medical and mental health services, substance abuse counseling, educational programs, food services, and the management of prison industries. However, private ownership and management of correctional institutions themselves generates the most controversy. "Although the correctional system has long contracted for various private services with good results, contracting for facility ownership and management is a significant departure from traditional reliance on private support services" (Durham, 1994: 264; James et al., 1997).
Financial Infrastructure: Investment and Stockholdings
Our investigation into the financial infrastructure upon which the private prison industry rests led us to examine important forms of investment and stockholdings. Most notably we found that private correctional companies receive significant capital support from larger corporations and financial institutions. Indeed, that economic backing can be easily traced to institutional stockholders and its volume of shares. For example, Corrections Corporation of America (CCA) lists 114 institutional stockholders that together amount to 28,736,071 shares of stock. The largest number of shares of CCA stock is held by RS Investments (3,296,500), Wesley Capital MGMT (2,486,866), and Capital Research and MGMT (2,057,600). Cornell Companies is supported by 36 institutional stockholders with 9,587,496 shares. Its top three are Pirate Capital (2,269,700), Dimensional FD Advisors (1,224,300), and Fund Asset Management (1,142,500)....
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