By KOPIN TAN
For-profit prison operators are gaining as demand for cells outstrips supply.
AMERICA HAS 5% OF THE PLANET'S POPULATION, but 25% of its prisoners. This should be good news for the private prisons that absorb the spillover from our congested federal and state penitentiaries, but, alas, the recession has ruffled the economics even of law and order. Cash-strapped states seeking to cut the cost of housing inmates are mulling drastic measures, ranging from quicker paroles to earlier releases. Not only have the headlines alarmed some citizens, they have frightened investors as well.
As a result, private-prison stocks are selling at unusual -- and untenable -- discounts. The three biggest companies are Corrections Corp. of America (ticker: CXW), which controls 39% of private-prison beds, Geo Group (GEO), which runs 25%, and Cornell (CRN), with 10%. While their stocks have rebounded this year, they still trade at 12 to 18 times what each is expected to earn in 2010 -- compared with multiples pushing 30 before the budget crisis.
A study by the nonpartisan Pew Research Center points to an arresting development in the land of the free: For the first time, one in every 100 adults is behind bars, and state funds spent annually on corrections have swelled from $10.6 billion in 1987 to $44 billion. While the Department of Justice says violent crime has declined since 1993, drug arrests and reported crimes have increased. [my emphasis]
Conitune reading article http://online.barrons.com/public/article/SB125574536753691649.html?mod=mktw
This increase in prison population is NOT about solving the crime problems in the US; it's about profits. Profits seem to be the powerful motivator in the creation of the "War on Drugs" as well. Catherine A Fitts describes the connections between the political figures and the laws created to intentional increase the prison populations and how they have been profitting in this scheme in her story "Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits" in chapters 8, 9 and 10.
Other related articles by Ms Fitts -
Prison as Industry http://www.drugwar.com/fittsprisonmemo.shtm
The Myth of the Rule of Law
Cheney Indicted for Prison Profiteering
Narco Dollars for Beginners