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The Shocking Ways the Corporate Prison Industry Games the System

The private prison system has rebounded, growing dramatically, and making big bucks with huge help from the Feds, as large numbers of immigrants are incarcerated.

The United States, with just 5 percent of the world’s population, currently holds  25 percent of the world's prisoners, and for the last 30 years America’s business entrepreneurs have found a lucrative way to cash in on the incarceration surplus: private for-profit prisons.

While the implications of an industry that locks human beings in cages for profit is an old story, there is an important part of the history of private prisons that often goes untold.  


Just a decade ago, private prisons were a dying industry awash in corruption and mired in lawsuits, particularly Corrections Corporation of America (CCA), the nation's largest private prison operator.  Today, these companies are booming once again, yet the lawsuits and scandals continue to pile up.  Meanwhile, more and more evidence shows that compared to publicly run prisons, private jails are filthier, more violent, less accountable, and contrary to what privatization advocates peddle as truth, do not save money.  In fact, more recent findings suggest that private prisons could be more costly.  

So why are they still in business?

In a recently published report, " Banking on Bondage: Mass Incarceration and Private Prisons," the American Civil Liberties Union examines the history of prison privatization and finds that private prison companies owe their continued and prosperous existence to skyrocketing immigration detention post September 11 as well as the firm hold they have gained over elected and appointed officials.

The Rise of Private Prisons

David Shapiro, the primary author of the ACLU report, told AlterNet that prior to the early 1980s, private prisons were “virtually nonexistent.” That quickly changed as the War on Drugs ‘tough on crime’ mentality swept the nation with institution of draconian sentencing and release laws for nonviolent offenders, causing an explosion in US incarceration rate.  State and federal governments increasingly struggled with overcrowded prisons and the rising costs of housing the rapidly growing pool of inmates.  

Coupled with the emergence of privatization madness under Ronald Reagan (a pattern that has continued under both Democrat and Republican administrations), skyrocketing imprisonment presented the perfect opportunity for the private sector to get in on the action, with promises of cost savings and more efficient operations than government-run facilities.   In 1984, the Corrections Corporation of America was awarded a contract to operate a public jail in Hamilton County, Tennessee, and the nation’s first-ever private prison was born.  

According to the ACLU report, From 1970 to 2005, the number of people locked up in the US shot up by 700 percent. Meanwhile, between 1990 and 2009 the number of prisoners behind private prison bars exploded from 7,000 to 129,000 inmates, a growth rate of 1600 percent.   But the private prison boom of the ‘90s did not last.  

Immigration Detention Saves the Day

In 1999, independent auditors were skeptical about whether CCA could stay afloat because beds were empty and the company experienced a $72 million net loss in revenue. By 2000, an article in BusinessWeek declared “the industry is in a rut, and its prospects have been severely trimmed. Overbuilding and ill-fated financial schemes have hammered stock prices. States, once eager to outsource their inmates, are backing out of private prison contracts. News of escapes and violence at private prisons adds to a climate of distrust.”   The article concludes that “the industry's heyday may already be history.”

A 2001 article in the American ProspectBailing Out Private Jails, offers a snapshot of the industry’s bleak future at the turn of the century:

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