Private Prisons for Dummies

Largely without notice or fanfare, a multi-billion dollar per year criminal justice industry has emerged -- an industry with local, state, national and international implications. However, the effect of privatizing and commercializing justice has received limited attention. Increasingly, criminal justice is about commerce and profit, with policy being driven by business, political and private interests. To continue ignoring the economic context in which criminal justice occurs and the corresponding policy implications is politically naive and socially irresponsible.

There is strong evidence to support the existence of a corrections-commercial complex similar to the military-industrial complex President Eisenhower spoke of in 1961. He used this term to describe a relationship between the Federal bureaucracy, key members of Congress and private industrial interests. Eisenhower warned that this elite group had the power to determine national defense policy free from public scrutiny with far-reaching economic, political and social consequences (Adams, 1982).

The arrangement depicted by the military-industrial complex is also referred to as an iron triangle or a subgovenment. The sides of the triangle protect the participants from external influence, regulation and public accountability. An exchange of personnel links the Executive and industry sides of the triangle and creates a closed network of shared, homogeneous ideas in the particular policy area. The potential conflicts of interest created by this arrangement can affect prices, supplies and free-market competition.

The relationships in this closed network are reinforced by corporate contributions to political action committees (PACs) as well as membership in trade associations and governmental advocacy committees. PACs provide political education for corporate managers, supervisors and employees as well as a guide for lobbying efforts. Contributions to PACs strengthen the relationship between the industrial and Congressional sides of the iron triangle. Trade associations maintain regular working groups of corporate representatives who serve on Federal advisory committees. The trade associations are a critical link between industry and government. Advisory committees, composed of private sector and government representatives, provide advice on national policy issues. They are an avenue of company access to national policy formation and membership results in significant advantages to the companies involved.

Robert J. Lilly, in his 1993 article, "The Corrections-Commercial Complex", uses the concept of subgovernmental policy-making to describe the working alliance between federal agencies, for-profit corporations and professional organizations. This closed network of participants operates together to control policy making and has four key characteristics:

1) Participants share a close working relationship which stabilizes over time and is dependent on a steady exchange of information, access, influence, personnel and money.

2) Each subgovernment displays an overlap between societal interests and the particular government bureaucracy involved. The ties between industry and the government are reinforced by the exchange of personnel.

3) Subgovernments maintain a low profile, operating outside of public awareness

4) A subgovernment takes on the quality of permanence within the given policy area. Partisan politics does little to disturb the relatively autonomous arrangement.

A number of issues have converged to enable the emergence and growth of a corrections-commercial complex. McDonald (1990) suggested that interest in privatized corrections services has been stimulated by facility overcrowding and the need for immediate cell space, tougher penal policies, and the use of tough on crime policies for political gain or advantage.

Overcrowding of penal institutions was not the only economic incentive for engaging the private sector in the criminal justice industry. The projected cost savings of private sector provision of services was politically attractive. Given the lack of dramatically increasing crime rates during the time of rapidly expanding prison populations, the monetary concerns generated by facility overcrowding were merely the most visible concerns.

Various changes in sentencing practices have resulted in the incarceration of a rapidly growing number of people. The most popular measures among politicians have been the "three strikes" and "career criminal" laws. Although it is highly improbable that the average citizen is aware of the wide range of "crimes" to which these laws are applied, limiting their application would also limit their political appeal. Research shows that those states with career criminal laws continue to have crime rates comparable to those without such laws but have the fastest growing prison populations. These laws not only ensure a large number of long-term inmates who will add to the overcrowding problem but also guarantee a continued and expanded market for crime control related commodities.

The statistics on changes in prisoner demographics and numbers emphasize some of the consequences of the "get tough on crime" philosophy. The construction of criminality along racial and economic lines is a prime marketing strategy for corporations who profit from the corrections industry. Public policy ensures that these people are blamed for their position in society while fostering support for laws which reinforce existing stereotypes and discriminatory practices. Wideman (1995) argues that tough on crime policies are substituted for dealing with the social problems which are the root causes of crime. Private corporations must demand new criminality to increase profit and safeguard the market for their services, so there is inherent support for policies which use incarceration rather than policies promoting social change.

The issue of marginalization of an increasing number of people and corporate manipulation of this process to maximize profits is clarified by Barnett and Cavanaugh (1994). They examine the question of what happens to the people who are no longer needed to manufacture goods or provide services. Corporations downsize to increase profits and conserve resources. The production of a relative surplus population creates a population of people who are both threatening and vulnerable at the same time. Their marginal status lessens their commitment to maintaining the existing system, while their lack of power and status increases the likelihood they will come under official control. The resulting anger and resentment engenders actions by those in power to accommodate the displaced, not as producers or consumers (there are no jobs or purchasing power), but as commodities in the prison system. In effect, the corporations, through their role in marginalizing greater and greater numbers of people, ensure a market for crime control goods and services.

Tunnell explains the increase in the sale of crime related commodities and target hardening products during a time when crime rates have varied little as, "capitalism’s ability to create commodities from both social problems and unfounded needs." (1992:293). Commodification is the process of producing and selling goods and services; it results in consumers defining certain products and services as ‘necessary’ for their social existence and lifestyles. The media play a major role in forming the public’s perception of crime. The overemphasis on violent crime leads to people internalizing a false sense of danger which leads to the identification of crime-related commodities as life and lifestyle sustaining necessities.

The idea of both crime and punishment as economic tools used to reinforce the status quo and further the gap between the haves and have nots is not a new concept. In capitalist societies, marginalized people are themselves commodities to be exploited and controlled -- either as laborers, consumers or property for the benefit of the powerful. Engels stated that the force behind the commodity exchange (the process of buying and selling) is compulsory competition. In applying this to the commodification of crime and its role in the corrections-commercial complex, it becomes clear that the media create the perception of more and new public needs for crime control related commodities. As the scope of perceived needs increases, the number of companies and level of competition increases also. Generation of profit is dependent on increasing the commodities for exchange, so consumers must be convinced that more commodities are necessities (versus wants) and the cycle continues.

When discussing the goods and services which private corporations produce and sell within the corrections industry, we most often think in terms of selling to government operated prisons and jails. "The cost of corrections is discussed primarily in terms of demand and only then in terms of tax dollars spent on correction employees and operation expenditures. These figures do not address the various private and corporate interests which comprise the supply or commercial side of punishment." (Lilly 1996:6). There are numerous privately provided criminal justice products which are not directly tied to jails or prisons but are part of the larger criminal justice industry.

Many of these companies do not consider the sale of goods and services to penal institutions to be their primary marketing interest, but they must also be considered when formulating a comprehensive picture of the industry component of this complex. For example, additional crime related commodities produced and sold by private corporations to private consumers include: guns, firing range registrations, 24 hour safe depositories, home and auto alarm systems, closed circuit TV security systems, security lighting and fencing, property marking tools, and self-help books (Tunnell 1992).

Private Security and Prison Management Corporations:

Although private correctional facilities represent only a small percentage of existing prison and jails, they continue to be a hot political issue. They garner political advantage for proponents through appealing not only to the public’s growing fear of victimization but also as a quick fix for the huge economic responsibilities created by "get tough on crime" policies.

The provision of core management functions by private firms is referred to as operational privatization. Wackenhut, founded by a former C.I.A. employee, was one of the first companies to become involved in the operational privatization of prison facilities. Wackenhut is an international corporation, supplying not only security but also food, healthcare, education, rehabilitation, facility management, architecture and design, construction, financing, staffing, screening and training of employees and personnel management services. George R. Wackenhut, CEO, and Richard Russell Wackenhut, President of Wackenhut Corporation, are also officers for 22 other corporations, the majority of which are part of Wackenhut’s worldwide network of correctional facilities.

Wackenhut Corrections, founded in 1985, is majority owned by Wackenhut Corporation, a global enterprise, offering a wide range of services in fifty countries. Wackenhut Corrections produces revenues in excess of $150 million yearly. In 1995, Wackenhut Corrections was among Forbes Magazine’s "200 Best Small Companies" with ten years of at least 10 percent growth. Standard and Poor’s "Register of Corporations, Directors and Executives – 1995", reports sales of $664.16 million, 46,000 employees and an international marketing territory for the parent Wackenhut Corporation. Its products and services include: security services (including guards, airport pre-departure screening and court and airport checkpoint screening), investigations, comprehensive operations and services for government or private facilities, management of educational and job training facilities, emergency medical and airport fire rescue services, armored cars and guards.

Based in Sarasota, Florida, Esmore Correctional Services, Inc. is the third largest publicly held operator of correctional and detention facilities with a 1996 compound average growth of 36 percent (Company Report 1996). Esmore is run by James Slattery, who was formerly with the hotel industry and thus understands the all important link between occupancy rates and profit. Slattery is one of the company’s founders and the owner of approximately 20 percent of Esmor’s common stock. Michael Garretson, the Chief Operating Officer, has several years of business experience including two years as Sr. Vice President - Business Development for Wackenhut Corrections, Director of Area Development for Infrastructure at EURODISNEY and has worked with several land developers. Ira Cotter, Executive Vice President - Finance, was a Vice President of Janney, Montgomery and Scott’s investment banking department. Esmore is positioned to capitalize on any privatization trend. Through a focus on the high per diem/low fixed cost end of the market, Esmor has been able to maintain operating margins in excess of 35 percent.

The Corrections Corporation of America (CCA) is the oldest and the largest private sector United States correctional company. Their backers include the same investment firm that helped bankroll Kentucky Fried Chicken franchises. Standard and Poor’s Register identifies CCA’s primary business interest as the design, construction and management of detention and corrections facilities and reports 1995 sales of $100.42 million. CCA had a record year in 1996 with the highest operating income in the company’s history. Revenues increased by 41 percent and net profits increased 115 percent (Prison Privatisation Report International 1997).

On July 24, 1997, CCA announced second quarter and six month net income growth of 66 percent and 86 percent respectively on revenue growth in excess of 50 percent. Revenues in the 1997 second quarter were $107 million, up 59 percent from the second quarter of 1996. Net income for the first six months of 1997 was $23.6 million, compared with $12.7 million in the same period of 1996. (CCA: Letter to Shareholders 1997).

The exchange of government and industry personnel typically found in a subgovernment is evident in the Corrections Corporation of America. CCA has been linked to possible conflicts of interest due to its close relationships with state and local officials in its home state of Tennessee. Some of CCA’s original shareholders were influential state and local politicians, including Governor Ned McWherter, Honey Alexander, the wife of former Governor Lamar Alexander, and John Neff, Alexander’s insurance commissioner. Also, after Hamilton County Commissioner Bob Long voted to approve CCA’s proposal for the Silverdale Work House, Long’s pest control company was awarded a CCA contract. After he left his government post, Long was hired as a lobbyist for CCA.

Although Pinkerton’s Incorporated is primarily associated with investigative and security services, Standard and Poor (1995) identify the following additional business interests: personal protection, ATM protection, background and workers’ compensation investigations, consumer attitude and employee integrity testing, pre-employment selection services. Pinkerton’s Inc. reported $772 million in sales and 45,000 employees for 1995.

Estimating the Size of the Prison- Industrial Complex

The number and type of companies involved in selling commodities and services to prisons and jails is one measure of the commercialization of punishment in this country. Lilly (1996) examined this question using the American Correctional Association (ACA) annual Buyers’ Guide for 1991 as his source of information. He then used Standard and Poor’s Register of Corporations, Directors and Executives to identify additional corporate interests of the companies who advertised in the Buyers’ Guide. The findings identified the sales orientation of 87 percent of the companies as national or international versus local or regional. This substantiates the relevance of the American punishment industry for criminal justice in other countries.¹

Following Lilly’s methodology, I used the 1995 Buyers’ Guide to explore the number of companies and type of goods and services they produce for sale to prisons and jails. I then used Standard and Poor’s Register to determine these companies’ connections to other corporations through the sharing of key personnel.

There were 303 companies listed in the Buyers’ Guide Company Index and 131 companies in its Index to Advertisers. Of the companies listed in the Index to Advertisers, 36 were also found in Standard and Poor’s Register. Seventy-six additional companies were identified who had the same key personnel as those found in Standard and Poor. This came to a total of 112 companies.

Of the 36 core companies (those found in both the Buyers’ Guide "Index to Advertisers" and Standard and Poor) 34 reported sales information and 36 reported employee information for 1995. The sales for these companies totaled $37.234 billion and they employed 169,013 people. If Esmore, CCA, Wackenhut and Pinkerton’s are included, these figures increase to $38.880 billion in sales and 305,213 employees. The magnitude and diversity of the for-profit corporation component of the corrections-commercial complex is further illustrated by the ACA Buyers’ Guide Product Category Index which lists a total of 180 different corrections related goods and services. This data illustrates the prominent role commercialization plays in the field of criminal justice and emphasizes the need for inclusion of the economic component in future research.

If the multitude of companies providing criminal justice related goods and services is merely a response to a true market need, further concern may not be necessary. Any decrease in demand would simply mean these companies would pursue other markets for their goods and services. What we see happening, however, is the expansion of the corrections industry although the need is more perceptual than real. This misperception is fueled by all forms of the media as well as political grandstanding focused on re-election and power rather than the public good. Existing social inequalities are exploited and reinforced to justify the continuation of ineffective policies and thereby guarantee a permanent and expanding market for the products of the corrections industry.

The politicizing of crime and punishment has turned a moral and social concern into an economic issue with a corresponding loss of focus on the social outcomes. Politics cater to those who have the power to re-elect and the political system which constructs corrections policy does so in response to the people, organizations and corporations who have that power. Therefore, policy does, and will continue to, reflect the interests of an influential few rather than the public at large.

Politicians focus on the crime problem as a diversion from larger social problems. They are not only supported but also joined in this tactic by the corporations who stand to benefit financially as a result of the existing social inequalities. As criminal justice strategies target marginalized populations they ignore the social conditions which contribute to crime. As more public dollars are diverted from social programs, the prison becomes the key strategy for managing expanding numbers of marginalized people. The combination of political rhetoric, media manipulation, tax dollars and corporate profit motives translates punishment into a business opportunity. When the focus of corrections becomes profit, crime and the existence of the criminal become economic necessities and will be created to the level needed to maximize corporate profit.

What are the moral and ethical concerns related to relinquishing the mechanisms of punishment and crime control to profit motivated corporations? There is a fundamental question of whether the public good and the welfare of private corporations are compatible. By definition, private corporations were not established for serving the public good; they were established to generate profit for corporate owners and shareholders. The bottom line is that a corporation is an entity without moral motivation or conscience, and they are increasingly dominating the areas of justice and punishment.

Durham (1989) also examined the issue of possible consequences of the loss of enthusiasm for the benefits of reform and the current focus on economic concerns relative to institutional overcrowding. She suggests that by focusing on the private sector and economic concerns, policymakers are able to ignore the need to develop alternative methods of responding to the issue of crime. She also argues that, if history repeats itself, a state which adopts private initiatives to address immediate penal conditions may become dependent on the private sector resulting in the continuation of commercial involvement even when the need diminishes. This corresponds to one of the key characteristics of subgovernment politics -- the quality of permanence in the relationship between government and private industry.

The commercialization of criminal justice goods and services exploits the symptom (crime) while ignoring the cause (inequality of opportunity). The birth place inequalities which deny a large segment of society equal access to the means of attaining the "American dream" are the same conditions which are likely to produce crime. The existence of a corrections subgovernment which advocates policies that reinforce these inequalities may be considered a form of cultural violence.

Lilly (1996) suggests that the size and nature of the corrections industry should, in itself, signal the need for caution and that parallels can be drawn with the defense industry and commercialization in general. Also, a simple review of the history of privatization of correction services in America brings to light a history of conflicts of interest, influence peddling, inmate abuse and political entrenchment. Although we should learn from past experience, the continued use and expansion of ineffective crime control strategies would indicate we have not learned — and that we can expect the same problems to reoccur.

There should be little argument relative to the existence of a corrections-commercial complex. The close working relationship of participants, the sharing of high level personnel, industry connections to major financial institutions, the overlap of societal interests and the government policy making apparatus, and the development of permanence in these relationships all point to the existence of a corrections subgovernment. That this has occurred with very limited public awareness or scrutiny further affirms the existence of a self-perpetuating, stable and insulated relationship that responds to the interest of its participants rather than the public at large.

The magnitude of the corrections industry, including its international aspects, highlights the need for focus on the economic components of criminal justice in future research. To date there appears to be a lack of research that examines all of the contexts in which criminal justice operates (political, economic, social and moral) and then integrates those aspects with the goal of developing policies which are more responsive to true societal needs.

1. Some of the products and services found in the international punishment market include: new communication technologies, cross border prison and jail construction and management, food and medical services, increased use of internationally linked data networks (Lilly 1996). The British media has also reported plans for some U.S. firms to do international electronic monitoring of offenders in their English homes from the United States.

Adams, Gordon. 1982. The Politics of Defense Contracting: The Iron Triangle. Transaction Books.

American Correctional Association. 1995. Buyers’ Guide. Corrections Today. July, pp 178-264.

Barnet, Richard and John Cavanaugh. 1994. Global Dreams: Imperial Corporations and the New World Order. New York: Touchstone.

Carlson, James. 1985. Prime Time Law Enforcement: Crime Show Viewing and Attitudes Toward the Criminal Justice System. Westport: Praeger.

Durham, Alexis M. III. 1989. Origins of Interest in the Privatization of Punishment. Criminology v 27 #1, pp 107-139.

Gragg, Randy. 1996. A High Security, Low Risk Investment: Private Prisons Make Crime Pay. Harper’s. August, p 50.

Irwin, Johm and James Austin. 1997. It’s About Time: America’s Imprisonment Binge, 2nd ed. Belmont: wadsworth.

Kicenski, Karyl. Cashing in on Criminality: Private Prisons, Corporate Power and the Color of Crime. George Mason University.

Lilly, J. Robert and Mathieu Deflem. 1996. Profit and Penality: An Analysis of the Corrections-Commercial Complex. Crime and Delinquency v 42 #1, pp 3-20.

and Paul Knepper. 1993. The Corrections-Commercial Comlex" Crime and Delinquency. v 39 #2, pp 150-166.

McDonald, Douglas C. 1990. Private Prisons and Public Interest. Rutgers University Press.

Prison Privatisation Report International. 1997. v 8, March.

Rogers, Joseph W. 1989. The Greatest Correctional Myth: Winning the War on Crime Through Incarceration. Federal Probation. v 53 #3, pp 21-27.

Tunnell, Kenneth D. 1992. Film at Eleven: recent Developments in the Commodification of Crime. Sociological Spectrum. v 12, pp 293-313.

Wideman, John E. 1995. Doing Time, Marking Race. The Nation. v 261 #14, pp 503-506.

 

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