The Privatization of Control

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There are more than 125,000 inmates in privately owned American prisons. The birth of the “prison-industrial complex” can be traced to the early 1980s, when tougher sentencing, prison overcrowding and the “War on Drugs” led lawmakers to embrace privatization. In 1984, the Corrections Corporation of America (CCA) was contracted to manage a facility in Tennessee — the first time any level of government handed complete operation of a jail to a private firm.

CCA and its largest competitor, GEO Group, together made more than $2.9 billion in 2010. They collect a daily rate per inmate and routinely lobby Congress for stiffer sentencing laws. While the number of people in state-operated prisons has risen 16 percent since 2000, the number in private facilities has more than doubled.

Investors like Merrill Lynch, American Express and Allstate reap a lucrative return buying prison bonds that finance these private facilities. Though touted as cost-saving, there’s evidence that they’re more expensive than public prisons. Private prisons often refuse inmates with expensive medical conditions. Their smaller staffs and scant training also enable more violence.


Despite exorbitant costs and recurring scandals, the U.S. military could not meet its deployment needs without private contractors. At the height of the Iraq war it was estimated that 100,000 contractors worked alongside 150,000 GIs. “We literally could not go to war today without [these contractors],” Col. Kevin Farrell, chief of the military history program at West Point, recently said.

While the average base military salary ranges from $16,000 to $40,000, a private contractor doing the same job for Xe Services (the mercenary outfit formerly known as Blackwater), Raytheon or KBR, Inc. earns $150,000 to $200,000. Essentially shadow armies run by veterans, they are typically exempt from local statutes and international laws of war, such as the Geneva Conventions. They enjoy immunity from punishment for prisoner-abuse and torture.

In 2007, Blackwater personnel opened fire on unarmed Iraqi civilians, killing 17. Though an FBI investigation found that the majority of the killings were “unjustified and violated deadly-force rules,” none of the contractors involved were charged with a crime.

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