Prison System

What is the most profitable industry in America? Weapons, oil and computer technology all offer high rates of return, but there is probably no sector of the economy so abloom with money as the privately-run prison industry.

Consider the growth of the Corrections Corporation of America, the industry leader whose stock price has climbed from $8 a share in 1992 to about $30 today and whose revenue rose by 81 percent in 1995 alone. Investors in Wackenhut Corrections Corporation have enjoyed an average return of 18 percent during the past five years and the company is rated by Forbes as one of the top 200 small businesses in the country. At Esmor, another big private prison contractor, revenues have soared from $4.6 million in 1990 to more than $25 million in 1995.

Ten years ago there were just five privately-run prisons in the country, housing a population of 2.000. Today nearly a score of private firms run more than 100 prisons with about 62,000 beds. That's still less than five percent of the total market, but the industry is expanding fast, with the number of private prison beds expected to grow to 360,000 during the next decade.

The exhilaration among leaders and observers of the private prison sector was cheerfully summed up by a recent headline in USA Today: "Everybody's Doin' the Jailhouse Stock". An equally upbeat mood imbued a conference on private prisons held in December 1996 at the Four Seasons Resort in Dallas. The brochure for the conference, organized by the World Research Group, a New York-based investment firm, called the corporate takeover of correctional facilities the "newest trend in the area of privatizing previously government-run programs... While arrests and convictions are steadily on the rise, profits are to be made-profits from crime. Get in on the ground floor of this booming industry now!"

A hundred years ago private prisons were a familiar feature of American life, with disastrous consequences. Prisoners were farmed out as slave labor. They were routinely beaten and abused, fed slop and kept in horribly overcrowded cells. Conditions were so wretched that by the end of the nineteenth century private prisons were outlawed m most states.

During the past decade, private prisons have made a comeback. Already 28 states have passed legislation making it legal for private contractors to run correctional facilities and many more states are expected to follow suit.

The reasons