Rotten Capitalism

Prison Gold Rush

The US does not really good on the global peace index and one reason is the huge number of people locked away in prisons. One state, however, tops it all: Louisiana. Its incarceration rate is 7 times the one of China and 26% more then the next state in the list, Mississippi. Why is that?
Besides the obvious reasons of a poor population, high crime rate and a conservative population demanding harsh punishments, there is a simple financial reason: local sheriffs get paid for each inmate!

As a solution for overcrowded prisons, the state decided to pay private prison operators $24.39 per inmate. You don’t need an MBA to figure out that economies of scale will result in a huge incentive to put almost everyone into prison. Furthermore, if you get a fixed rate you will try to minimize the costs meaning minimum room, bad food, limited supervision and no programs to prepare inmates for their life outside of prison.

And what happens in Louisiana? Yes, exactly that. Inmates get out with $10, a bus ticket and not much else. Of course to come soon back again to the favor of the private, revenue-driven incarceration company.

(Source: The Economist)