- Jun 22, 2008
What is the most profitable industry in America? The privately run prison industry.
In the 1980s, several private corporations specializing in "correctional facilities" began taking prison management off the hands of federal and state agencies. Since then, those companies have grown into massive operations. They're in almost every state and their complete takeover of the "correctional market" is predicted to happen in the next five years.
The largest, Corrections Corporation of America, boasts 82,000 beds in 66 facilities, in 19 states and Washington, DC. The corporation has grown since 1983, with stock going from $8 to $30 per share by 2000; it now stands at just over $15. The crime wave of the early 1990s, ensuing "three strikes" legislation, and the War on Drugs have made private prisons a profitable business.
Several factors have led to the increase in private prisons, but let's consider the number of prisoners currently in American jails. The United States has the highest documented incarceration rate, and total documented prison population in the world. As of year-end 2007, a record 7.2 million (2.3 million were incarcerated) people were behind bars, on probation or on parole. More than 1 in 100 American adults were incarcerated at the start of 2008. The People's Republic of China ranks second with 1.5 million, while having four times the population.
-740 in every 100,000 Americans are imprisoned
-1 in every 100 Americans is in jail or on probation
In the US, a ballooning number of people, predominantly Black males, are being imprisoned. The cost of managing all of these "correctional facilities" has ballooned accordingly:
The Bureau of Justice recorded an increase in spending from $9 billion for corrections in 1982 to $65 billion in 2005. Taking into account police and judicial expenditures; just over $35 billion in 1982 and just under $200 billion in 2005.
A privately-run prison system has absolutely no incentive to reduce the rate of incarceration in the US; in fact, the only reason a private sector even exists is due to the quadrupling of prisoners since 1980.
It's not just facilities management: weapons contractors, telecom providers and financiers underwriting prison construction are all getting into the booming business of lockdown.
All of the major investment banks, including Goldman Sachs and Co., Merrill Lynch, and Smith Barney, have a stake in private prisons. Today's economic crisis has hit all sectors of the economy, but with joblessness on the rise and incomes plummeting, expect to see the stock prices of firms like CCA, the Geo Group and other fine institutions continue to rise.
The three leading corporations in the private prison business in the U.S. are the Corrections Corporation of America, the GEO Group, and Cornell Companies.
Corrections Corporation of America (CCA) is a company that manages public prisons and detention centers, and has concessions for many others. The company is the largest private corrections company in the United States. As such, CCA manages more than 60 facilities with a designed capacity of 85,000 beds. Revenue: US$ 1.478 Billion (2007)
The GEO Group (GEO) is a leading provider of government-outsourced services specializing in the management of correctional, detention and mental health and residential treatment facilities in the United States, Canada, Australia, South Africa and the United Kingdom. GEO operates a broad range of correctional and detention facilities including maximum, medium and minimum security prisons, immigration detention centers, minimum security detention centers and mental health and residential treatment facilities. Revenue: US$ 1.024 Billion (2007)
Cornell Companies is a large American corporation primarily concerned with providing corrections services and facilities to state governments on a contract basis. Cornell currently operates 71 corrections facilities in 15 states and the District of Columbia. Revenue: US$ 360.6 million (2007)