Big Bucks from the Big House:
the prison industrial complex and beyond
excerpted from the book
Police and Prisons in the Age of Crisis
by Christian Parenti
Verso Books, 1999
What business enterprise could conceivably succeed with the
rate of recall of its products that we see in the "products"
of our prisons?
Chief Justice Warren E. Burger, 1985
In 1989 another tsunami hit - and this time the tidal wave
was political. The California Department of Corrections rolled
in, and with little opposition built the sprawling $277.5 million
Pelican Bay State Prison, one of the newest, meanest super-max
lockups in the system. Pelican Bay, an international model of
sensory deprivation and isolation, deems half its inmates incorrigible
and locks them away in the SHU, twenty-three hours a day. The
prison is also Crescent City and Del Norte County's largest employer-and
in many ways the region's new colonial master.
The new prison's political and economic clout is all-the-more
exaggerated due to Crescent City's extreme isolation and poverty.
Only four of the area's seventeen sawmills are still in operation,
commercial salmon fishing is dead, and during the mid eighties
164 businesses went under. By the time the CDC came scouting for
a new prison site, unemployment had breached 20 percent. Del Norte
County, with Crescent City at its heart, was in a seemingly terminal
economic torpor. Prison was its only hope.
To clinch a deal with the CDC local boosters found a piece
of cheap unincorporated land, fed water, sewer, and power lines
to it, and otherwise soothed local anxieties about hosting several
thousand criminals. Today in Crescent City the emerging American
police state means economic survival; Pelican Bay provides I,500
jobs, an annual payroll of $50 million, and a budget of over $90
million. Indirectly, the prison has created work in everything
from construction and pumping gas to domestic violence counseling.
Just the contract for hauling away the prison's garbage is worth
$ 130,000 a year - big money in California's poorest county. Following
the employment boom came almost 6,000 new residents: Del Norte's
population (including 4,000 prisoners) is now 28,000. In the last
ten years the average rate of housing starts has doubled, as has
the value of local real estate.'
Also cashing in on the action is a huge Ace Hardware, a private
hospital, and a 90,000-square-foot K-mart, selling everything
from toothpaste to Spice Girl paraphernalia. Across from K-mart
is an equally mammoth Safeway. "In 1986 the county collected
$73 million in sales tax; last year it was $ 142 million,"
says County Assessor Jerry Cochran.
On top of that, local government is saving money by using
low-security "level one" prisoners in place of public
works crews. Between January 1990 and December 1996, Pelican Bay
inmates worked almost 150,000 hours on everything from school
grounds to public buildings. According to one report, the prison
labor, billed at the meager sum of $7 per hour, would have cost
the county at least $766,300. "Without the prison we wouldn't
exist," says Cochran.
The prison industrial complex
Little town and big prison: it is a marriage that has been
replicated scores of times in recent years. From Bowling Green,
Missouri, to rural Florida, economically battered towns are rolling
over for new prisons. Nationally, the tab for building penitentiaries
has averaged about $7 billion annually over the last decade; in
1996 alone contractors broke ground on twenty-six federal and
ninety-six state prisons. Estimates for the yearly expenses of
incarceration run between $ 20 and $ 35 billion annually, and
one report has more than 523,000 full-time employees working in
American corrections-more than in any Fortune 500 company except
General Motors. In the American countryside punishment is such
a big industry that, according to the National Criminal Justice
Commission, 5 percent of the growth in rural population between
1980 and 1990 was accounted for by prisoners, captured in cities
and exiled to the new carceral arcadia.
Is prison building the current delivery system for Keynesian
stimulus in a post Cold War, demilitarized America? Is the emerging
prison industrial complex replacing or augmenting that behemoth
constellation of civilian government, military power, and private
capital that Eisenhower dubbed the "military industrial complex"
and which for two generations has been America's defacto industrial
policy? This is the line argued by a few on the left and, to some
extent, by writers in the Wall Street Journal and Atlantic Monthly.
But this analysis begs several questions. First, is the military
industrial complex - driven by the Pentagon budget withering and
being transformed piece by piece into a domestic war machine?
A glance at the facts suggests not. The 1999 Pentagon budget topped
$297 billion, the greatest in real terms ever, and six to ten
times the total annual tab for incarceration. So while Heckler
and Koch and other arms dealers may be pushing their wares on
America's cops and fomenting a paramilitary culture, and Wackenhut
sinks more capital into private prisons, these expansions are
not forced by a peace-driven Pentagon downswing.
Nonetheless, we might ask: are specific corporate interests
driving criminal justice policy, as is often the case with military
policy? This "prison as Pentagon" argument generally
cites three ways in which incarceration bolsters capitalism: broad
Keynesian stimulus (as in the case of Crescent City), the privatization
of prisons and prison-related services, and the exploitation of
prison labor by private firms. All of these features of the prison
industrial complex are important, but none of them-alone or together-explains
why we are headed for what Jerome Miller calls a "gulag state."
The rest of this chapter will explore each of the crucial
points on the prison-business nexus, and then turn to another
explanation for the lockdown economy, one based not on direct
and specific corporate interests, but rather on an analysis of
punishment and terror as class struggle from above.
As with Pelican Bay and Crescent City, new prisons seem to
gravitate towards the terrain of economic devastation. For example
in 1994, Rome, New York, lost 5,000 jobs when Griffiss Air Force
Base shut down. Exacerbating the crisis was Lockheed Martin's
slow withdrawal of almost 1,000 well-paid jobs from nearby Utica.
Chicago Pneumatic Tool Company also decamped to the sunny non-union
climes of North Carolina, taking 430 more well-paid manufacturing
jobs. But as this industrial base slipped away, new prospects
emerged on the economic horizon: some of the best jobs in the
region belonged to the 2,612 people employed at four nearby state
prisons. And so the local boosters at the Rome Chamber of Commerce
started lobbying for new dungeons in the hope of capturing a few
more of those $36,000-a-year jobs. In this case, prison was clearly
a local solution to military and defense contractor restructuring;
other areas of the country offer similar examples.
Victorville, in southern California's dry "Inland Empire,"
spent most of the nineties in an economic tailspin after George
Air Force Base was shuttered in 1992, taking more than 5,000 military
and civilian jobs with it. By late 1998 town leaders were aggressively
courting the Federal Bureau of Prisons in an attempt to win the
right to host a new 1,900-bed, $60 million prison just outside
town. The new lockup promised to deliver anywhere from 250 to
800 jobs and a $1 to $2 million annual payroll.
Not far from Victorville is the hamlet of Blythe, the victim
of nearly two decades under the yoke of the chronically low price
of its agricultural produce. Blythe's first move toward economic
resuscitation was the 1988 arrival of a big new penitentiary.
Civic boosters liked the first joint so much they won themselves
a second in 1995.7 Other agricultural areas are also trying to
make the switch from produce to prison. For example, South Bay,
Florida, "the town that lettuce built," is prime incarceration
country. Less than sixty miles from moneyed and manicured Palm
Beach, South Bay is nestled on the southern edge of Lake Okeechobee.
Economically speaking the town is light years away from Florida's
tourist simulacrum: with 3,500 residents, South Bay is the land
of trailer parks, cane fields, and unemployment. When there was
talk of building a $32 million prison in the area, the town fathers
jumped. Even before South Bay Growers, one of the nation's largest
producers of winter vegetables, fired 1,336 workers and switched
from labor-intensive row crops to highly automated sugarcane production,
the surrounding area had an unemployment rate of 22 percent. The
planned South Bay Correctional Facility a piece of Wackenhut's
transnational private prison empire - promised up to 400 jobs
and an $ 11 million annual payroll. To cement the deal the Palm
Beach County Commission donated a plot of land worth $300,000.
"This is one of those win win propositions . . . We're determined
to see that bad people stay in prison a lot longer," reassured
the economically practical Governor Lawton Chiles. While the multiplier
effect of prison salaries will staunch some of the economic damage
in and around South Bay, it will not create prosperity.
One of the saddest attempts at prison-based growth was a case
in northern Missouri, where local boosters offered to retrofit
the defunct Tarkio College into a minimum security pen. Such schemes
to convert bases, factories, or schools rarely come to fruition
because contractors prefer building from scratch. After all, most
prison builders can get land for free from desperate local governments.
In 1989, Florence, Colorado, bought 600 acres of ranch land for
$ 100,000 and gave it to the Bureau of Prisons, which proceeded
to build four major lockups there. In the early nineties this
sort of prison-courting-by-way-of-subsidy reached absurd proportions.
In 1991, recession-ravaged Appleton, Minnesota, population 1,552,
sold $28.5 million in municipal bonds and built a city-owned,
state-of-the-art, medium security prison on a fallow soybean field.
"The world has written us off," explained a city bureaucrat.
"It's up to us and us alone. Nobody is going to help bail
us out." " Fueled by desperate optimism and little else,
the Appleton prison found itself unable to fill a single cell
nor meet its debt obligation until mid 1993.
Even in the best of situations prison stimulus is often overestimated.
In Florence, Colorado, home of those four Bureau of Prisons penitentiaries,
the economic payback and linkages have been less than expected.
About 30 percent of the prison's employees live outside the county,
commute huge distances, and end up spending and paying taxes elsewhere.
While a local firm has the garbage contract, most prison purchasing
is done on a regional and national level, thus bypassing local
retailers. To top it all off the pens pay no property taxes.
Prison stimulus can also mean economic distortion. In oil-busted
Fort Stockton, Texas, two big prisons meant an influx of relatively
well-paid construction workers and then guards, all of which triggered
a mini real estate bubble and skyrocketing rents. Crescent City,
California, suffered a similar housing crunch. In Fort Stockton,
even the optimists saw the town's new economic function as bringing
only a short-term reprieve: "Growth," said one, "will
probably continue for the next two to three years." '4 In
the southern end of California's Central Valley, near the prisons
of Avenal, Corcoran North Kern, Pleasant Valley, and Wasco, the
incarceration industry has put such a strain on the local schools,
sewers, roads, and medical services that the state was recently
forced to dole out $2 million in mitigation funds.
And what of prison building's spin-off effects? After all,
the economic magic of military Keynesianism is worked not through
the wages of soldiers as much as it is through bomb building's
concatenated forms of technological and industrial spin-off. Cold
War pork spending and government incubation of defense industries
has helped develop the US interstate highway system, state universities,
commercial jets, most of telecommunications including the Internet,
the microprocessor, fiber optics, and laser surgery. All of these
institutions and technologies were hatched with government money
in government-subsidized universities; and all were directly,
or indirectly, part of the technological race against Soviet socialism.
In short, the American high-tech sector is a byproduct of Pentagon
spending. No such economic linkages can be attributed to the prison
boom. Rather, the best it can offer is the occasional example,
such the growth at Pueblo Community College: thanks to the high
number of penitentiaries located in the Pueblo to Canon City corridor,
the college's criminal justice program has gone from several dozen
students in 1985 to a current enrollment of about 600 '6 In fact,
criminal justice and justice administration programs are on the
rise nationwide P7 But this cottage industry, in what amounts
to vocational training in the arts of repression and file keeping,
hardly compares to the Cold War-inspired high-tech revolution.
Besides the quantitative question of growth, prison stimulus
has disturbing qualitative implications. Like prison itself, the
incarceration business often advances racist agendas. In the prison
economy, people of color are the fodder: two-thirds of all prison
admissions are Black or Latino people. Meanwhile, downwardly mobile
white working class men are most often the keepers. In most states
well over half of all guards are white men. As the guarding profession
grows, the demographics of public employment tend to skew towards
the profile of the white male turnkey. Due to the rise of rural
prisons, white men in Illinois still get more than half of all
newly created public sector jobs, while the percentage of white
women and people of color employed by the state has declined throughout
the 1990s. Former Illinois governor Jim Edgar explained the increasingly
pallid complexion of public employment thus: "One of the
few areas we've hired people in the last two years has been for
prisons in down-state Illinois and, unfortunately, that isn't
where you necessarily recruit a lot of minorities." Thus
cleavages of race, class, and geography are enlisted to reproduce
and manage an unfair economic system.
In conclusion, it is safe to say that incarceration is a small-scale
form of Keynesian, public-works-style stimulus. New penitentiaries
can revive economically moribund regions and, acting as anchor
industries, can bring in other employers such as medical services
and retail chains. But these pockets of pork-driven prosperity
remain tiny islands in a vast sea of stagnant agriculture, deindustrialization,
and what we might call post-organized, downgraded manufacturing.
The gulag provides opportunities for localized growth but it does
not and will not assume the mantle of defacto industrial policy,
because it cannot and will not replace the economic role of military
and aerospace spending.
Another player in the matrix of interests referred to as the
prison industrial complex is the fast-growing and powerful private
prison industry. Through assiduous cultivation of state officials
the private prison industry is increasingly active in shaping
criminal justice policy, but its partnership with the state also
faces problems: recent events have unveiled private jailers as
cheats, liars, and liabilities.
For-profit lockups currently control some 5 percent of all
US prison beds; they make huge profits and spend amply to sway
politicians and public opinion. The current round of private incarceration
began with a Reagan-sponsored experiment to house INS detainees
at private detention centers in Houston and Laredo, Texas. The
architect of the plan was Attorney General Meese (who now works
at a for-profit, pro-privatization think-tank). In response to
the federal government's broad invitation to capital, a pair of
Tennessee entrepreneurs, using money from Kentucky Fried Chicken
and the know-how of several public sector corrections veterans,
set up the first private prison company, Corrections Corporation
of America. At the apex of this fast-growing empire is a troika
of well-connected good old boys: Doctor Crants, CCA's president
and visionary; his old West Point roommate, CCA co-founder Tom
Beasley, who quite conveniently served a stint as chairman of
the Tennessee Republican Party; and finally, providing the technical
expertise, is T. Don Hutto, former commissioner of the Virginia
and Arkansas Departments of Corrections. l9 Others board members
include corrections veterans such as Michael Quinlan, former director
of the Federal Bureau of Prisons.
For most of the eighties and early nineties, CCA, like its
competitors, concerned itself with cherry-picking: seeking easy-to-handle
contracts for minimum security prisons. This was a prudent attempt
to prove that private capital could handle society's cast-off
populations without any major explosions. But CCA and the others
soon set out for bigger prizes. Fifteen years after the first
"experimental" incarceration of immigrants, corporate
jailers now control roughly 100,000 prison beds nationwide in
over a hundred different facilities in twenty-seven different
states. CCA's market share is approximately 52 percent of all
privatized American prison beds. Globally, its empire includes
seventy-eight prisons holding more than 63,000 beds in twenty-five
states, the District of Columbia, Puerto Rico, Australia, and
the United Kingdom. However, the company's political and geographic
stronghold remains Tennessee, where it dumps inmates from Wisconsin,
Hawaii, Montana, the District of Columbia, and Puerto Rico into
a sprawling, barely regulated private prison system.
Financially CCA has performed handsomely. One investment firm
dubbed it "a theme stock for the nineties." In 1995
the company went public at $8 a share: by the year's end the price
had soared 462.5 percent to $37. However, recent scandals and
increasing disenchantment among state legislators have brought
CCA stock down to roughly half its peak value. But the company,
capitalized at $3.5 billion, is still a "secure" investment
and growth remains strong. To maintain market dominance CCA does
things the old fashioned way: giving generously to politicians
and buttering up the press. In recent years Doctor Crants has
distributed more campaign money to Tennessee politicians than
any other individual. The company also operates a robust lobbying
operation in D.C. and in several states where it has investments.
The next largest private jailer is Wackenhut Corrections,
with about 17,000 beds at twenty-four facilities. Named after
its founder, former FBI agent George Wackenhut, the firm is a
subsidiary of Wackenhut's private security service, which made
it big more than forty years ago by scooping up contracts to guard
America's nuclear waste dumps and testing installations. Wackenhut
also did some freelance spooking: by the late sixties the corporation
had dossiers on three million American "potential subversives."
This was the largest collection of private surveillance files
in American history and was later handed over to the FBI. By the
1970s and 1980s the company had expanded into strike-breaking
and guarding US embassies. George Wackenhut still runs the business
from his castle-like mansion in Florida and from the deck of his
yacht, Top Secret. Since going public in 1994, Wackenhut's stock
price has soared 800 percent and split once 26 The company's board
of directors is, like CCA's, a juice-laden den of far-right political
mucketymucks, including Frank Carlucci, former NSA advisor to
President Reagan; Bobby Inman, formerly deputy director of the
CIA; and for a long time, the now deceased Jorge Mas Conosa of
the Miami-Cuban lunatic fringe and the Clinton inner circle.
Behind CCA and Wackenhut is a hungry pack of some sixteen
other firms that run local jails, private prisons, and INS detention
centers. Underwriting the growth of both public and private prisons
are a battery of mainstream financial houses. It is estimated
that giant Wall Street firms such as Goldman Sachs, and Merrill
Lynch write between $2 and 3 billion in prison construction bonds
every year. And like any self-preserving "industrial complex,"
the private prison sector is cultivating a coterie of paid opinion
makers. Most notable is the Private Prisons Project at the University
of Florida, Gainesville, which receives over $60,000 in grants
every year from private jailers. The project's staff of researchers
focuses on tutoring journalists and churning out predigested policy
briefs which are spoon-fed to state and federal lawmakers. The
center's director, Charles W. Thomas, has been quoted literally
hundreds of times as a non-partisan expert, despite the fact that
he personally owns stock in CCA, Wackenhut, and a slew of other
for profit dungeons. Private prison firms have also flown journalists
to plush overseas hotels with limousines on call. Swimming alongside
the big fish of incarceration are schools of for-profit caterers,
prison HMOs, private transport companies, architecture firms,
and other subcontractors that feed at the margins of the prison
So clearly we have the formation of an "industrial complex"
in the original sense of the word, a government-backed juggernaut
of mutually reinforcing corporate interests. These companies are
led by people-powerfully connected men with sophisticated political
agendas and who are positioning for long-term growth and political