The story of prisons for profit — and how Trump saved them
by Lyubov MITINA in LIFE.ru, translated by Tom Winter
Fort Russ News (November 27 2016)
“Jail for this one, home for that one. How Trump saved the prisoners business.”
The first shock therapy session “Donald Trump – US President” is over. And while millions of ordinary Americans are wondering how to they are going to live, the companies that own private prisons in the United States are counting their gains: After the election results were announced the value of their shares jumped twenty to forty percent. LIFE.ru reports on how the “prisoners business” was established and how much money it brings in.
The private prisons system is relatively new, and now operates in the UK, Australia, Canada and the United States.
As of 2016 in England and Wales, there are fourteen private places of detention, and another two in Scotland, which contains fifteen percent of the prisoners of the United Kingdom. In Australia, seven of them; in Canada – two, but it turned out to be the most successful project in the United States. In this country, private prisons really contribute to the economy.
Thirty Years of Slavery
The modern history of private prisons in the United States began with another shocking US President, Ronald Reagan, who held the post from 1981 to 1989. In 1984, he transferred control of the correctional institution in Hamilton County in Tennessee to the American Corporation of Corrections (Corrections Corporation of America, or CCA), that is entered into a deal with the operator, who took the responsibility to find and hire their own supervisors and other employees, who undertake to support the regime .
A year later, CCA offered the Government $200 million for all the penitentiaries of Tennessee, but Washington had to refuse the offer after a wave of protests by civil servants. Despite this, the CCA was able to expand quickly enough.
In the US, there are several companies operating places of detention. The aforesaid Corrections Corporation of America is considered the largest. Now it has attained market capitalization of $2.29 billion, as shares are traded on the New York Stock Exchange at $20.29 apiece, while in the year 2000 the price per share was only a dollar.
CCA was created by Robert Krants and in its 33 years of existence, the corporation has expanded its presence to twenty US states.
Another major operator is called the GEO Group, formerly known as Wackenhut Securities. The headquarters of the company are located in Florida, and it was founded a year later than CCA, in 1983. The market capitalization of the GEO Group is slightly less than that of its competitor, at $2.18 billion and one share on the New York Stock Exchange is $30.23. Some of the largest investors in these companies are Wall Street banks. For example, Wells Fargo has invested $100 million in the GEO Group, and $6 million in CCA.
Among the other private investors in the US these can be identified: Bank of America, Fidelity Fund, General Electric, and The Vanguard Group.
About 300 investors hold more than 92% of the shares in CCA; 270 investors hold more than 91% of the GEO Group. Among which are mainly banks, insurance companies, funds, and private equity firms.
Who owns the rest of the percentage of shares it is difficult to say, because individual shareholders often use the services of intermediaries. Thus, it can be argued that private prisons are firmly integrated into the US financial system, and closing them would cost a pretty penny.
Another well-known operator of private prisons in the US is Management and Training Corporation, or MTC. This is a non-public company, as are Community Education Centers, LaSalle Southwest Corrections, and Emerald Correctional Management.
Benefits for All, Except the Prisoners
The operator can either conclude a service contract with a state prison already in being, or build a new building on their own. However, it can negotiate with both the federal government and at the level of local authorities of the US states. Also it is possible to simply buy out the prison and contract for services or offer to take on some portion of prisoners in state prisons, which are often overcrowded.
In the CCA, for example, they claim that the private prison is a more effective solution for taxpayers since maintenance is up to fifteen percent cheaper for them than for the state: that the companies manage to procure the necessary goods from suppliers for less. CCA also claims that they build their new buildings in a year to a year and a half, while the construction of public buildings takes from three to six years. In this case, if the CCA prison building designed for a thousand prisoners will cost the company $75 million, the same thing would cost the state more than $150 million.
Declaring how they benefit free citizens, the CCA asserts that it creates hundreds of jobs for the county where it has a prison, and provides a regular flow of taxes to the treasury. At present CCA operates 88 agencies, most of which are located in the south (Texas, Oklahoma), in the east of Tennessee, and in the midwest – in the State of Colorado.
On the Benefit of the Office
So what do the prisoners do in US private prisons? Basically they prepare office furniture. According to statistics, about 21% of chairs, tables and cabinets for paper and other furniture in the offices of various organizations are made by the hands of prisoners who are serving time in such institutions.
It is known that this right is enjoyed by giants such as IBM, Boeing, Motorola, Microsoft, AT&T, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom’s, Revlon, Macy’s, Pierre Cardin.
According to human rights organizations who do not grow tired of condemning the production in private prisons, the majority of prisoners are African American or Hispanic.
For the beneficiaries the prisoners are almost free labor, whose rights are not protected by a union. They will not go on strike, will not be late for work, will not get sick, will not go on maternity leave, will not go on vacation, will not miss a day for “family reasons”. And for refusing to work they can be put in solitary confinement.
The End for the Times of Gain
In August of this year, Deputy US Attorney Sally Yates announced the US Department of Justice decided to gradually reduce the number of private prisons to zero and round out their thirty-year history in the country. First, the US Justice Department recommended to the local authorities that they be more selective in renegotiating contracts, to significantly reduce their number. Reason: No adequate level of safety and correctional programs.
The same day, CCA shares fell fifty percent, and Jonathan Burns, a representative of the company, made a statement in which he denied the allegations made by the US Department of Justice. He criticized the performance of the deputy prosecutor general, and suggested that the prisons operated by the CCA are no worse from the point of view of safety from the public ones, and the correctional systems are identical.
Nevertheless, there were no further struggles in the press from the Justice department.
The Same Day
And now November 9 2016 has come. Election day has been, if nothing else, survived, but after it became clear that the new president would be Donald Trump, the stock markets in the world shuddered. Some stocks were down, some were up. If some quotations of oil and Asian indices were in the red, the American jailers were in a tremendous plus.
Trump’s victory meant for them no further struggle for existence, and an increase in work after gaining oversight of migrants, after the words of the businessman-scandalist during his election campaign.
CCA shares went up forty percent in price, and the value of GEO Group added on twenty percent. And why? Former US first lady and former US Secretary of State Hillary Clinton had promised if elected president to deal with the activities of corporations that operate prisons.
Her party colleague Bernie Sanders before leaving the race also promised to commit to the fight against private prisons, since the purpose of any correctional institution is at its best, correction of behavior and rehabilitation of the offender, rather than profit.
Supporters of the US Democratic Party also held several rallies in support of closing private prisons, demanding an end to the practice of transferring business models to prison.
But … history, as they say, does not know the subjunctive mood.