Prisons: The New Growth Industry

Note: This is a cross-post from my personal blog, The Bull in Full.

I linked without comment to a YouTube video, which was a fake drug ad for a compound called Incarcerex.  The ad promotes haphazard incarceration of drug users as a means to fix political ills, and is a brilliant piece of satire—I can't recommend it highly enough.

After posting that video, I was leafing through my print edition of the Herald-Sun, and came across the latest from Malcolm Berko in the business section.  I like reading Berko—he's certainly not handing out tips for socially responsible investing, but his irreverence for the icons of the financial world, like brokerage firms and Alan Greenspan, make him fun to read.  This week's column (linked from a paper with a more reasonable archiving system), though, was a tad disturbing.  A read wrote in asking about his shares in GEO, which used to be called Wackenhut, which Berko had recommended a few years ago.  As Berko notes, the company's revenues have gone up 450% in the past decade.  Why?  Because they run prisons. 


Because GEO is proof positive that crime does pay, it's also reasonable to assume that crime will stay because there's an enormous vested interest
in this wonderful and profitable growth industry. GEO employs 10,400 people who make a good living housing society's underworld. My daughter, a criminal attorney, and her husband, who is a judge, earn a great living because crime is a superb growth industry.

. . .

Because it pays, crime is here to stay and prosper. So hold on to your GEO. Many of the suits believe that the coming decade, crime will be just as prosperous for GEO as was the last decade.

This is classic irreverence from Berko, so I'm not terribly annoyed at his tone.  But whether his reader should hold onto his GEO shares aside, why have prisons become such a big growth industry?

An op-ed by Ronald Fraser in the Asheville Citizen-Times (a truly abysmal paper most of the time) might shed some light:

Rulers in Libya, Zimbabwe, Saudi Arabia, China and Pakistan made Parade Magazine’s 2005 world’s worst dictators list. And the National Council on Crime and Delinquency, located in Oakland, Calif., has issued a report titled, US Rates of Incarceration: A Global Perspective, showing the incarceration rates for these five dictatorships – the number of persons in prison for every 100,000 population – ranging from a low of 57 in Pakistan to a high of 207 in

By comparison, prison policies made in Raleigh locked up 360 state citizens for every 100,000 population in 2005. In other words, North Carolina imprisons its people at a rate one and a half times faster than Muammar al-Qaddafi’s Libya and six times faster than Pakistan under Gen. Pervez Musharraf. If inmates held in local jails in North Carolina were added in, the spread would be even wider.

As Fraser points out, North Carolina is hardly unique in this distinction.  Only five states in the union incarcerate fewer citizens per capita than Libya. Why so many prisoners?

But the Sentencing Project in Washington, DC, reports,
“Criminologists Alfred Blumstein and Allen Beck examined the
near-tripling of the prison population [in the U.S.] during the period 1980-1996 and concluded that changes in crime explained only 12% of the prison rise, while changes in sentencing policy accounted for 88% of the increase.”

Legislatively dictated sentences for even minor
offenses tie the hands of judges and juries. These mandatory minimum punishments continue to keep hundreds of thousands behind bars for just using or selling tiny amounts of “illicit” substances.

In addition, about one-half of all inmates in the U.S. are serving time for non-violent offenses. If prisons were only used to separate dangerous people from the rest of society, the 31,522 state prisoners in North Carolina in 2005 could be drastically cut over night.

Ah, yes, Incarcerex.  It truly is a wonderful thing. 

These arguments should be reason enough to rethink our penal system, but there's so much more.  For starters, it averages around $30,000 to keep a person in prison for a year.  In using this figure, a presenter from Columbia University at the Association of American Geographers conference this year started looking at inmates' last addresses before incarceration, and mapping them out to see where they were living.  One outcome they found: for one eleven block area in Brooklyn, over $12 million dollars was being spent just to incarcerate people who called those blocks their last address.  Columbia calls this the Million Dollar Blocks project, as each block has over a million dollars a year being spent to incarcerate its former residents. 

What are we getting for all that money spent?  I had the chance last weekend to chat with the partner of an old friend from high school who works in the penal system, and she confirmed that North Carolina's prisons are like just about every other one in the country: chock full of prison gangs.  Familiar names, she brought up, too.  Bloods, Crips, Folk Nation, Mexican Mafia and it's subsidiary gangs like MS-13, and so on and so forth.  If you go to youth prison in North Carolina for any length of time, it doesn't matter if you were a gang member when you went in.  The chances are overwhelming that, in order to gain protection, you'll be a gang member when you get out.   We're spending $30,000 a year to take young men (and it is, of course, overwhelmingly men) off the streets for largely non-violent offenses, put them in prison where they'll certainly be physically assaulted and quite possibly sexually assaulted, invariably recruited into a gang, and released back onto the street a few years later. 

Add to this that in Durham, our court system is so backed up because of under-funding from the General Assembly that we accidentally release accused  murderers back onto the street on low bonds.  So we don't even keep the worst ones apart from society.

Since one of my pet peeves is people who do nothing but critique without offering some manner of solution or route for action, I feel I should provide something of the sort here.  But honestly, I'm overwhelmed by the problem.  A start would be adequate funding for our courts, steps to increase order in our prisons so that hardened street gang leaders no longer have the ability to intimidate non-members into joining, and reforming our drug laws.  The political obstacles to each of these, however are enormous.  I'm open to suggestions.

In the meantime, GEO, a company which makes money by charging the states and feds discounted rates to effectively hold prisoners in pens with no order enforced will continue to be a great investment.

Bumped by SD/Betsy
Formatting and typos cleaned up by MTB now that it's not 2 in the morning...