Nation of Criminals: Selling Prisons 'for Profit'

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They're major players in corporate America. Companies operating inside a $74 billion industry.

What are they selling? Prison cells.

They contract with dozens of states and the federal government to house inmates and undocumented immigrants. The industry has been around for decades, but conditions are ripe for a major expansion.

"As states are being increasingly crunched for space, facing very strong or very large deficits, they need to find ways to reduce costs, and so this is one way that they can help solve budgetary problems," David Muhlhausen, a research fellow with the Heritage Foundation, said.

Muhlhausen said private prisons offer savings to governments of about 3 percent and reduce prison overcrowding, which is a major problem for many jurisdictions.

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It's a savvy business model, but the practice of contracting the caging of humans to private companies operates under a thick cloud of controversy.

Jesus Cardenas' Story
About three years ago Jesus Cardenas was locked up for check fraud. He served nine months in a prison run by the Texas Department of Criminal Justice.

He then transferred to a private facility run by Corrections Corporation of America to serve the rest of his sentence.

Cardenas told CBN News he immediately noticed a difference in the level of security.

"They were just going through the motions. Their officers were just drawing a paycheck," he said.

"When I say going through the motions, instead of going through my property to see if I had picked up any contraband or anything of that nature, they went ahead and used my property slip that I left the [previous] unit with," he said.
CCA maintains that its staff adheres to the highest standards in corrections. However, Cardenas' complaints are shared by other former inmates, some of whom have filed lawsuits against the companies that own the facilities where they were locked up.

When asked if he witnessed fights while serving time in a private facility, Cardenas laughed.

"There was a fight, at least one or three a day, period," he said. "And the way it was done, most of the time, is a fight would happen and usually no one would really know about it unless it was to a serious extreme."

Corporations, Crime Don't Mix

Critics complain that private prisons cut corners on salaries, guard training, inmate medical care, and facility maintenance to add to their bottom lines.

"The model as a whole has not had a happy history," Dr. Fran Buntman, a criminologist at George Washington University, said.

In her opinion, for-profit companies should not be in the business of locking up criminals.

"Ethically we need to deal with the fact that when we have chosen to put people in prison, we've taken away from their liberty rights to control their own lives," Buntman said.

"We as a society and the government as the institution looking after them have a responsibility to their welfare," she continued. "We cannot subcontract out that responsibility to a private agency."

For critics of the industry, their fears materialized a few months ago when CCA proposed a $250 million deal to 48 states. The company would buy state prisons and manage them if the states would guarantee a 90 percent occupancy rate.

"What's more important? People or money?" John Whitehead, founder of the Rutherford Institute, asked.

"I'm not saying corporations are evil, but corporations exist for one reason, to make money, maximum profit," he continued. "That's okay if you're making widgets or toothpaste, but when you're dealing with people and you're making money off of people -- you're starting to treat people like they're toothpaste and you're making money off of them and I think that's way we're headed.

"We're de-personalizing people in this country and I think that we're heading to a country where people are going to be treated like they're products," he said.

However, Muhlhausen warned critics not to lose sight of the fact that it's the criminal justice system, not the prison industry, that still determines who gets locked up and who doesn't and for how long.

"You have to get arrested and prosecuted by the state before you're sent to a private prison and then a judge has to release you based on early release because of behavior or because you served your full time," he said.

"And so private institutions don't set the intake or outtake of prisoners. They have no control over that aspect, and so they're just trying to house the inmate and provide the best services possible and deliver savings on to the taxpayer," Muhlhausen said.

'Unique Investment Opportunity'

In a recent investor presentation CCA pitched its "unique investment opportunity" in a "large and under-penetrated market as only about 10 percent of prisoners are in private partnerships."

The company boasts of "limited competition," and points out that public prisons are overcrowded as prison populations are growing.

It adds that, historically, inmate populations have grown despite economic conditions. Since the beginning of the 2008 recession, CCA's inmate population grew by more than 12 percent.

The company points out that another reason investing in the jailing of people makes good financial sense: "high recidivism." CCA cites a Pew study that found more than 43 percent of the people released from prison in 2004 returned within three years.

Encouraging Illegal Immigration?

Buntman said turning the imprisonment of people into profit leads to the over-criminalization of America and deemphasizes rehabilitation.

"Ultimately we want to lower our crime rates, we want to lower our punishment rates, we want to lower our antisocial behavior," she said. "We want to make more people active, productive citizens, and by giving financial incentive to imprison people directly or indirectly, including through private prisons, what we're doing is we're finding a way to increase the incentive to put people in prison, to make new crimes and make the sentences for them longer and longer."
"Like in Texas, they've just built this really nice 608 bed facility that's like a dormitory," Whitehead cited as an example. "It has basketball hoops, you look out and there's a lawn in the prison.  It's for immigrants."

"What they're going to encourage is, in a very tacit way, is illegal immigration because it's important for them to fill those facilities because, remember they have to keep a 90 percent occupancy rate," he continued. "So we're going to see a lot of strange problems and we're going to wonder why the government isn't really cracking down on illegal immigration and that's going to be one reason."

Cardenas said the guards at the public prison where he served the first part of his sentence went to great lengths to separate gang members and limit contraband. When he arrived at the private facility he said he was locked up with members of multiple gangs who kept cell phones, drugs, and weapons in their cell.

He kept a ledger to document violations that ranged from serving rotten food to guards selling drugs to inmates.

"Bringing cigarettes in, cell phones in, medication, drugs, and things of that nature," Cardenas explained. "The only way something's going to happen or some kind of change is somebody is going to get probably seriously hurt or killed in order for somebody to say something or do something about this."

Public Oversight Needed

Experts agree public prisons have problems of their own and private companies have great incentive to cut the waste that government agencies tend to hold on to.

They also agree strong public oversight must be part of the public-private prison partnership.

"The market is only going to work if there are consequences for not performing well," Muhlhausen said. "And to the citizens, the state needs to be actively involved in making sure that it's getting the services it wants and the taxpayer is being benefited."

"And so when you do that, then you can have a really good outcome," he said. "You can have a reduction in prison costs and also have safe operating prisons."

Despite controversy, the private prison industry is expected to continue growing.

Whitehead said he expects the criminalization of America to grow with it, including the incarceration of more women and children.

"I think America has lost its way. I think the way we view people, the old Judeo-Christian viewpoint that people were created in the image of God, they had great worth and dignity and we should care for them, we should try to get them on the right path," he said. "No, I think we look at people right now in a very suspicious way."

*Original broadcast May 16, 2012.

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CBN News
Jennifer Wishon

Jennifer Wishon

CBN News White House Correspondent

Jennifer Wishon is the White House correspondent for CBN News based in the network’s Washington, D.C. Bureau.  Before taking over the White House beat, Jennifer covered Capitol Hill and other national news, from the economy to the 2010 oil spill in the Gulf of Mexico. Follow Jennifer on Twitter @JenniferWishon and "like" her at