Big Bucks from the Big House:
the prison industrial complex and beyond

excerpted from the book

Lockdown America

Police and Prisons in the Age of Crisis

by Christian Parenti

Verso Books, 1999

p211

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.

Carceral keynesianism

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.

Private prisons

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 industrial complex.

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 influence.


Lockdown America

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