The United States has seen a vast increase in the number of drug offenders (the majority of them non-violent) and a corresponding increase in the private prison industry. As Wendy McElroy explains, these are not free-market solutions to a government problem: they’re monuments to crony capitalism:
The United States leads the world, by a large margin, in the production of at least one thing: prisoners. We have 25 percent of the world’s inmates, but just 5 percent of the world’s population.
Where do they come from? Well, since the Anti-Drug Abuse Act of 1986, the number of American inmates has risen from approximately 300,000 to a currently estimated 2.3 million. This statistic points to the role of drug-related victimless “crime” in creating prisoners.
There are other sources. The “private prison complex” is a creation of crony capitalism through which privileged corporations are paid well for the “care” of inmates and for leasing out prison labor to other businesses.
Ten percent of American prisons are now “privately” operated, for-profit businesses. Between 1990 and 2010, the number of for-profit prisons rose 1600 percent, far outpacing the growth of public ones or the population at large. The likelihood of being arrested is already higher in America than anywhere else in the world. That likelihood will rise if the financial incentives to imprison more people continue or increase.
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“Private” prisons are run by corporations to which government outsources the care of inmates. The corporation receives X tax dollars for each prisoner, quite apart from the actual cost of care. This builds in an incentive to skimp on services such as food and medical care. And, indeed, most prison contracts include a “low-crime tax” or “lock-up quota.” This system means taxpayers compensate the corporation for empty cells if the number of prisoners falls below a set quota. A recent report, “Criminal: How Lockup Quotas and ‘Low-Crime Taxes’ Guarantee Profits for Private Prison Corporations,” found the average “occupancy guarantee” to be 90 percent; in four states, it is between 95 percent and 100 percent. Thus the “private” prison is guaranteed a tax-funded profit.
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The “private” prison industry is private in the same sense that crony capitalism is capitalist. Namely, not at all. It is the antithesis of a truly private industry that competes in the free market, does not accept tax funds, and cannot compel labor. By contrast, the “private” prisons enjoy a monopoly over a service that is created by laws and sentencing policies. They receive tax money and preferential treatment. They exploit captive labor through circumstances similar to plantation slavery.
