Wake-up Call

Resist the Corporate State

Matt Stoller: Who Wants Keep the War on Drugs Going AND Put You in Debtor’s Prison?

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June 24, 2011 Naked Capitalism

Matt Stoller is a current fellow at the Roosevelt Institute.  His Twitter feed is @matthewstoller.

More than a third of all states allow debtors “who can’t or won’t pay their debts” to be jailed.  In 2010, according to the Wall Street Journal, judges have issued 5,000 such warrants.  What is behind the increased pressure to incarcerate people with debts?  Is it a desire to force debt payment?  Or is it part of a new structure where incarceration is becoming increasingly the default tool to address any and all social problems?

Consider a different example that has nothing to do with debts.  Earlier this year, a Pennsylvania judge was convicted of racketeering, of taking bribes from parties of interest in his cases.  It was a fairly routine case of bribery, with one significant exception.  The party making the payoffs was a builder and operator of youth prisons, and the judge was rewarding him by sending lots of kids to his prisons.

Welcome to the for-profit prison industry.  It’s an industry that wants people in jail, because jail is their product.  And they have shareholder expectations to meet.

Privatized prisons are marketed to international investors as “social infrastructure”, and they are part of a wave of privatization washing over the globe.  Multi-billion dollar prison companies are upgraded by analysts with antiseptic words like “prospects for global prison growth”, and these companies have built a revolving door and patronage machine characteristic of any government contractor.  Only, in this case, the business they are in is putting people into steel cages (or “filling beds” as they put it), and they don’t care how, why, or whether the people in those beds should be there.  They don’t care if you’re in prison for smoking pot, stealing cars, or being in debt.  They just want people in jail.

Here’s the 2010 10k of the Corrections Corporation of America (PDF), the largest operator of private prisons in the country.  It’s a pretty simple business model – more prisoners, more money.  Or, as the company writes, “Historically, we have been successful in substantially filling our inventory of available beds and the beds that we have constructed.  Filling these available beds would provide substantial growth in revenues, cash flow, and earnings per share.”

CCA offers an assessment of risks to the company, which include ending the war on drugs or curbing the incarceration of undocumented immigrants.

The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by our criminal laws. For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them.

Many people wonder why the Obama administration is so harsh with undocumented immigrants – these words supply an explanation for why such harshness can be profitable.

But there are more risks.

Legislation has been proposed in numerous jurisdictions that could lower minimum sentences for some non-violent crimes and make more inmates eligible for early release based on good behavior. Also, sentencing alternatives under consideration could put some offenders on probation with electronic monitoring who would otherwise be incarcerated. Similarly, reductions in crime rates or resources dedicated to prevent and enforce crime could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.

Reduced sentences, good behavior, and fewer arrests are business risks, where a high recidivism rate is a bonus in this schema.  And the lobbying and campaign donations flow from the business logic, as this report lays out.  These companies want to keep the war on drugs going, want caging of undocumented workers, and want to make sure that good behavior is rewarded with more jail time.  And the more like a police state America becomes, the better.

And in this business, state and local budgetary problems aren’t a bug, they are a feature.

Our competitive cost structure offers prospective customers a compelling option for incarceration. The unique budgetary challenges states are facing may cause states to further rely on us to help reduce their costs, and also cause those states that have not previously utilized the private sector to turn to the private sector to help reduce their overall costs of incarceration.

There’s bizarre stuff in the 10k, like worries about “negative publicity about an escape, riot or other disturbance or perceived poor conditions at a privately managed facility may result in adverse publicity to us and the private corrections industry in general.”  Or worries about being audited and subjected to criminal charges for billing clients for expenses that aren’t legitimate, if the company has incurred and billed for such expenses.  And then there’s this nugget, which gives a hint of the cruelty that is in all likelihood underlying the business model.

Moreover, the Federal Communications Commission, or the FCC, has published for comment a petition for rulemaking, filed on behalf of an inmate family, which would prevent private prison managers from collecting commissions from the operations of inmate telephone systems.

It’s unclear what the specifics are, but it sounds like a business that profits by extracting money from the families of prisoners by operating as a monopolist when it comes to the use of the phone system.  This is not a penal system, it’s a rentier culture applied to the freedom of human beings.

Turning denial of freedom into a for-profit industry is obviously quite dangerous, though in some senses that’s what the War on Drugs has always been about.  Ryan Grim’s This Is Your Country on Drugs” shows how drug restrictions were pushed at first by the pharmaceutical industry, and then used by the CIA as an off-balance sheet financing vehicle for America’s seedier allies.  Now the War on Drugs is a substantial part of the prison-industrial complex.

The War on Drugs and this new prison industry is a template for where we seem to be heading as a culture.  In the last ten years or so, a disturbing part of the system has metastasized into the system itself. As our financial system has increasingly and more overtly dominated the very structure of the country, freedom itself is being commoditized.

Debtor’s prison are making a comeback because of the debt collection industry. Elites like former Comptroller David Walker are waxing nostalgically for more punitive measures in the face of a population that simply cannot pay its debts.  The for-profit prison industry fits right in to this trend, both in terms of the financialization of the industry itself and the increased market for “beds” sought by for-profit prison lobbyists in terms of harsher prison sentences.

Trying to end the war on drugs and stopping the incarceration of undocumented workers should move up the priority list.  Once it becomes profitable to put people into steel cages, then it becomes profitable for judges to sell children in some creepy bizarro 21st century version of Oliver Twist.  And if you think the housing bubble was bad because it misallocated resources, or foreclosure fraud is bad because it allows powerful actors to seize property based on raw power, then imagine what could happen if the logic of the for-profit prison system met the same type of leveraged financial hurricane.


One Response

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  1. Mark T. is responsible for the International Mafia’s drugs and gambling empire.

    He’s the only American in the Mafia’s upper level. (The director and the other “captains” are Czechoslovak emigrants or their descendants.)

    Like every member of the International Mafia, Mark T. also works a “legitimate” job so he looks normal on the surface. Specifically, he owns a car wash.

    Twice a year, he goes to Columbia to oversee the Mafia’s cocaine operations. How does he travel? Well, that’s the interesting part of this story.

    He travels as an administrative aide for a group of doctors who perform charitable eye surgery.


    October 31, 2011 at 4:22 pm

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