COVER/Randall G. Shelden

The Prison Industrial Complex

We've spent billions for new prisons while
crime prevention, rehabilitation are shortchanged

Criminologists after years of study have reached the inescapable conclusion that the recent boom in prison construction and the rise in the inmate population has had little relationship to crime.

In fact, we can easily conclude that "crime pays" -- for both the criminal justice system and big business that caters to it. Employment in this industry offers careers for thousands of young men and women, many with college degrees in "criminal justice" programs at more than 3,000 colleges and universities. Most of these jobs offer not only good starting pay, but excellent benefits and a promise of future wage increases and job security. A multitude of businesses, ranging from small "mom and pop" security businesses to huge corporations listed on the New York Stock Exchange, have found it profitable to "invest in crime."

What do we get for the billions we have invested in new prisons? During the past several years we have seen reports in the news media about the falling crime rate. What we are not told, however, is that the recent drop in the crime rate brings us back down to the level of the early 1980s. Even this is misleading, for examining crime rates on a state-by-state basis reveals that in the past 15 years crime has fallen in some states, and risen in others; in some states violent crime has risen, while property crime has dropped; in other states just the reverse has occurred.

Meanwhile, the incarceration rate in every state has risen. As I will show below, the reason behind this increase is the willingness of states to send more and more convicted criminals to prison, especially those convicted on drug charges. In fact, drug convictions accounts for the bulk of new prison inmates during the past two decades. Meanwhile, for the average citizen, fear of crime remains a major concern, according to recent polls.

We have witnessed in the 20th century the emergence of a "criminal justice industrial complex." The police, the courts and the prison system have become huge, self-serving and self-perpetuating bureaucracies, which along with corporations, have a vested interest in keeping crime at a certain level. They need victims and they need criminals, even if they have to invent them, as they have throughout the "war on drugs" and "war on gangs."

A big part of this criminal justice complex is the prison industrial complex. A close look at the modern American prison system suggests a form of "Gulag," roughly the equivalent of the Russian Gulag. Indeed, the American prison system has many of the same characteristics of Gulags.

Prisons are literally found in just about every part of the country, with the bulk of them (especially those built during the past 20 years) in rural areas. There is also a great deal of human rights abuses in American prisons (and also jails and juvenile correctional facilities) such as cruel and unusual punishment (e.g., long periods in solitary confinement) and extreme brutality and violence. Moreover, there is much forced (and cheap) labor, much of which produces great profits for corporations.

The size of this system is so huge that it is almost impossible to estimate the amount of money spent and the profits made. Many observers have suggested that the criminal justice industrial complex has taken over where the "Military Industrial Complex" left off, since we no longer have many external enemies, so that we must now have internal enemies. The new enemy is crime, especially crimes committed by minorities. The specific focus has been on drug offenses and the behaviors of those identified as "gangs" (the definition of which is racially biased). During the past 20 years expenditures on crime control have increased twice as fast as military spending.

One can clearly see the size of this complex by first noting the annual expenditures (taxpayer dollars of course) of the three main components of the "criminal justice industrial complex": police, courts, and prisons. Since 1980 these expenditures have increased by more than 200 percent, with the largest increase being for prisons, which has risen by more than 250 percent (the federal prison system alone went up by over 300 percent during this time). The most recent estimates indicate that the total expenditures now exceed $100 billion annually (with the correctional system leading the way with more than $40 billion per year). During this period of time annual payrolls went up 142 percent (up 183 percent within the federal system), while employment increased by 44 percent (prisons and jails led the way with an increase of 96 percent). It now costs between $20,000-40,000 per year to house one inmate in the U.S. prison system! Most of these offenders can be dealt with much cheaper in community programs (at least half the costs of imprisonment). Pure prevention programs for disadvantaged youths can pay considerable dividends in the future -- in some cases for every dollar invested the taxpayer gets from $3 to $5 in return later in terms of crimes prevented, taxes collected from the youth working, etc. (I personally evaluated a program in San Francisco that demonstrated that using a community program in lieu of incarceration reduced the recidivism rate in half!)

Just look at the latest figures on American prisons. As of December 31, 1997, there were more than 1.7 million people behind bars in America. The overall incarceration rate (prisons plus jails) at that time was 630 per 100,000 population, which placed the United States second only to Russia. The incarceration rate increased by 124 percent between 1986 and 1998, and by 307 percent between 1975 and 1998. The rate of incarceration for African-Americans is about 8 times greater than for whites and the average black male has a 28.5 percent probability of going to prison in his lifetime, compared to a mere 4 percent chance for the average white male.

The actual number of prisons has also increased, along with, in some cases, the capacity within the prison -- some "megaprisons" can hold from 5,000 to 10,000 inmates. In 1990, there were a total of 1,287 prisons (80 federal and 1,207 state prisons); by 1995 there were a total of 1,500 prisons (125 federal and 1,375 state prisons), representing an increase of about 17 percent.

The federal system experienced the largest increase, going up by 56 percent. Prison construction has varied widely by state and region, with the largest increases occurring in the South (adding 95 prisons for an increase of 18 percent). The state of Texas has led the way -- adding 49 new prisons for an increase of 114 percent! California and Texas have the most prisons, with 102 each, followed by Florida at 98 and North Carolina with 93. Texas now imprisons one out of every 25 state residents.

And speaking of Texas, here we have a classic example of the "Gulag" look. Most of their 102 prisons have been built since 1980 and 80 have been built in the 1990s alone! An example of the rural nature of most of these facilities can be seen by sampling some of the towns where they are located (population according to the 1990 census): Iowa Park (6,072), Teague (3,268), Dilley (2,632), Brazoria (2,717), Kennedy (3,763), Dalhart (6,246), Marlin (6,386), Rusk (4,366), to name just a few. A check of the 1998 Rand McNally Road Atlas reveals that several Texas prisons are located in towns not even found on the map! These institutions are found literally in every part of the state.

The Texas prison system has more than 42,000 employees, operates its own heath services system (with more than 8,000 personnel, including 200 doctors) and has 35 lawyers working for them. Farming is big business, with control over more than 134,000 acres (about 200 square miles), operating the largest horse and cattle herds in the entire state (more than 10,000 head of cattle and around 1,500 horses). The system also operates 42 factories within 32 prisons under its own "Texas Correctional Industries." In 1995, this system had 575,000 under some form of community supervision, 71,000 on parole, 127,500 in state prisons and 963 in state jails, with a grand total of over 700,000. The most recent figures (December 31, 1997) show that there are just over 140,000 inmates in the state prison system and an incarceration rate of 717 (ranked first in the nation, except for the District of Columbia).

The reader might reasonably want to know how this has impacted the crime rate in Texas. It may come as a surprise that during a 15 year period (1983-1997) while the incarceration rate in Texas went up by 224 percent, the overall crime rate decreased by a modest 7 percent. But the rate of violent crime actually increased by 18 percent during this period! (This is why it is important, when examining crime rates, to take a longer view, rather than focusing on just a few years, like the 1990s.)

IN THIS COUNTRY the prison industrial complex has become a huge drain on taxpayers and the beneficiaries are mostly those who run the prisons and those providing products and services. This complex has emerged largely from "a confluence of special interests that has given prison construction in the United States a seemingly unstoppable momentum," writes Eric Schlosser in a recent article in The Atlantic Monthly. Aside from firms that build and operate correctional systems, there are several types of businesses that benefit directly from the imprisonment of offenders. These are firms that provide several different kinds of services, such as food, vocational training, medical services, drug detecting, personnel management, architecture, facilities design, and transportation, among others. There are also companies that sell a variety of products, such as protective vests for guards, fencing, furniture, linen, locks, and many more.

Private business interests are constantly on guard for opportunities to make a profit. An example is in the area of prison food services, a billion dollar enterprise that is growing by between 10 percent and 15 percent per year. Even the Campbell Soup Company is getting in on the action, noting that the prison system is their fastest growing market in food service!

Another good illustration of how companies are "cashing in" on the boom in prison and jail construction is found in the amount of advertising done in journals related to this industry. Examples can easily be found in two major journals serving the correctional industry, Corrections Today and The American Jail, plus the American Correctional Association's annual Directory. The Directory is fascinating in itself and illustrates how big this portion of the industry is. A recent issue (1997) is instructive. Numbering more than 700 pages, it lists hundreds of prisons and juvenile correctional facilities in both the United States and Canada, along with the federal system, and there are almost 100 different companies whose ads appear within. Corrections Today is the leading prison trade magazine and the amount of advertising in this magazine tripled in the 1980s. A few issues of these two journals have been sampled and advertisements are found everywhere. There is even a web site on the Internet called "corrections yellow pages" ( There are at least 1000 different ads on this site! Here are some sample ads in a recent issue of Corrections Today:

Prison Health Services, Inc. (noted in the previous paragraph), a company that, according to their ad, has since 1978 "delivered complete, customized health care programs to correctional facilities only. The first company in the U.S. to specialize in this area, we can deliver your program the fastest, and back it up with services that are simply the best"; Southwest Microwave, Inc., manufactures fence security, with their latest invention known as "Micronet 750" which is "more than a sensor improvement," it is "a whole new paradigm in fence detection technology"; Acorn Engineering, Inc., with their stainless steel fixtures known as "Penal-Ware" (lavatories, toilets, showers, etc.) and "Master-Trol" electronic valve system; Rotondo Precast, Inc. boasting "over 21,000 cells...and growing"; Nicholson's BesTea" with "tea for two or ... two thousand" ... "Now mass-feeding takes a giant stride forward ..."; Northwest Woolen Mills, manufacturing blankets with the slogan "We've got you covered"; and, "Prison on Wheels" from Motor Coach Industries, with their "Inmate Security Transportation Vehicle."

AMONG THE MORE RECENT developments in the prison industry has been the entrance of long-distance phone companies. Such industry giants as AT&T, Bell South and MCI have found prisons to be an excellent market for long distance business. Indeed, this makes sense because inmates all over the country spend countless hours on the telephone talking with relatives. Of course this requires a collect call, which brings these companies into prison for the huge profits to be made. AT&T has an ad that reads: "HOW HE GOT IN IS YOUR BUSINESS. HOW HE GETS OUT IS OURS." MCI, not wanting to miss out, went so far as installing, for free, pay phones throughout the California prison system. They levy a $3 surcharge for each phone call made, the cost of which is paid for by the inmate's relative. MCI offered the California Department of Corrections 32 percent of the profits!

A recent development in the criminal justice field, related specifically to the prison system, is the trend toward what is known as privatization. This is where a private corporation takes over the operation of a jail or prison. It should be noted that "privatization" is a trend that includes more than the criminal justice system. As one recent study noted, "contracting out," as it is often termed, involves a number of services formerly provided by state and local governments, such as public education, health care, waste collection and many more.

The extent of privatization is not known, nor do we have any estimates of the amount of money involved. However, I have a copy of the 1995 annual report of one such corporation, Corrections Corporation of America (CCA), which is quite revealing. CCA operates 46 correctional facilities, including one in England, two in Australia and two in Puerto Rico. It is a growth corporation, indicating an obvious vested interest in a relatively high rate of incarceration. Revenues went from $13 million in 1986 to $207 million in 1995 (an increase of 1492 percent), while assets increased from $8 million to almost $47 million (an increase of 488 percent) and stockholders equity increased from $24 million to $96 million (up 300 percent).

Private profit is obviously the driving force in the privatization of the correctional system. A report by Equitable Securities in March, 1996 called "Crime Can Pay," issued a "strong buy" advice to investors. The report concluded: "We consider the industry very attractive. There is substantial room for continued private-prison growth." The potential for profits has not escaped Wall Street. A Prudential Securities vice president, who is part of a "prison-financing team," is quoted as saying that "We try to keep a close eye on all the crime bills." Wall Street is indeed eager to back the growth in "crime control stocks" with such companies as Merrill Lynch, Prudential Securities, Smith Barney Shearson and Goldman Sachs among the leaders in support of privatization.

There is much debate concerning whether or not privatization saves tax dollars. Recent studies have shown mixed results, with some suggesting that prison costs are lower, while others say costs may begin at the lower end of the bidding, but after the prison is built the costs steadily increase. This latter interpretation makes sense for the simple reason that these are private corporations and they can increase what they charge anytime they want. But even in cases where the costs are in fact lower, the reason they are lower often include cutting back on labor costs and/or hiring people who are less qualified for the job.

Throughout the country many prisons (both private and public) have been built in rural areas, ostensibly on the assumption that more jobs will be created and the local economy will be improved. While little research has been done on this question, two recent cases are revealing, one in Pennsylvania and the other in Texas. In each case, the general rule of "if you build them they will come" was not the result.

In rural Carbon County, Pennsylvania, county commissioners have realized that the promise of more prisoners did not materialize, for their prison built to house 160 average around 100 inmates on any given day. Several correctional officers have been laid off as a result. This county is also realizing much higher medical costs, further draining resources. In the Texas case six different counties were promised ample prisoners and nice profits by a company called Pricor/N Group if $74 million in bonds were issued. The profits went to several lawyers and the company, but no prisoners showed up! Pricor was indicted, while two companies (including the investment firm of Drexel Burnham Lambert) were sued by investors who charged they were bilked to the tune of $70 billion.

How do we explain this phenomenal growth? In a word, drugs! A recent estimate is that convictions for drugs accounted for almost one-half of the increase in state prison inmates during the 1980s and early 1990s, as prison sentences on drug charges increased by more than 1,000 percent! Between 1980 and 1992, the average maximum sentence in federal courts declined for violent crimes (from 125 months to 88 months) and almost doubled for drug offenses (from 47 months to 82 months)! In fact, it has become progressively more serious to have been caught with drugs than to kill someone!

It cannot be denied that African-Americans have been the targets of this "war." For the first time in American history African-Americans constituted the numerical majority of prisoners in the early 1990s. Between 1985 and 1995 the number of African-American inmates who had been sentenced for drug crimes increased by 700 percent! On any given day, almost 60 percent (58.6 percent at last count) of all federal prisoners are serving time for drug offenses; of these 40 percent are African-American. Not only are more African-Americans sentenced for drug crimes, but the severity of their sentences had increased compared to whites. In one recent year (1992), in the federal system, the average sentence length for African-American drug offenders was about 107 months, compared to 74 months for white drug offenders. There has been a huge discrepancy when comparing powder and crack cocaine sentences in the federal system. In 1995, for instance, African-Americans constituted a phenomenal 88 percent of those sentenced for crack cocaine, compared to less than 30 percent of those sentenced for powder cocaine. Most of those who use powder cocaine have been white, while most of those using crack have been African-American.

It can argued that the "war on drugs" (and the "war on gangs") has actually been a "success" if the aim was to control the poor, especially African-Americans. The result is clear: institutional segregation or what I would call the a new form of "apartheid." (The old form of apartheid is residential segregation, which also has been on the increase in recent years.)

Imprisonment also resembles a form of "ethnic cleansing" not unlike what has occurred in the Balkans. President Clinton declared that NATO bombing "was necessary to stop ethnic cleansing and bring stability to Eastern Europe." Clinton further explained that "we are upholding our values, protecting our interests, and advancing the cause of peace." Yet at the same time, policies originating during the Reagan-Bush years and continuing throughout the "liberal" Clinton years are "cleansing" the "superfluous" minority population in America (especially African-Americans) by mass arrests, mostly on drug offenses, and long sentences to prison -- not to mention the fact that African-Americans are far more likely to receive the death penalty. If this is not a form of "ethnic cleansing" and even a slow method of genocide, I do not know what is. (Actually, our history is replete with examples of "ethnic cleansing," starting with the Native American population and continuing through World War II and the incarceration of Japanese-Americans in "relocation centers.")

Where it will end is anyone's guess. The National Criminal Justice Commission estimated that if recent trends persist, then by the year 2020 about two-thirds of all African-Americans males between 18 and 34 will be behind bars! Prison populations have been increasing from between 5 percent and 7 percent each year. Figuring an average annual increase of 6 percent, by 2020 there will be around 6.5 million in prison!

One final note is in order. Some may argue that the boom in prison construction has created jobs for many people, which should be seen as a positive thing. After all, prison building can be viewed as a sort of "Keynesian stimulus" to the economy. True enough, but there is a moral dilemma: could we not view this as something akin to the hiring of guards in the concentration camps of Nazi Germany or the "relocation centers" in America during World War II? Could we not hire people for prevention programs (like Boys and Girls Clubs) instead? A further dilemma is that while states have increased their budgets for prison construction, most have had to cut back on money spent for education, recreation (especially after-school programs, which have been proven to be good crime prevention techniques) and even libraries. The irony is that the fear of crime has not decreased during the past two decades.

Alternatives to Prison

There's a lot that can be accomplished by citizens. To begin with, we need to realize that the costs of imprisonment far exceed programs within communities. For example, recent estimates suggest that various alternatives (residential drug treatment programs, intensive supervision programs, etc.) can range in costs from around $2,500-$15,000 per offender per year, compared to an estimated $18,000-$25,000 per inmate per year in a state prison (these costs do not include the actual building of the prison, which can be in excess of $50 million).

A specific example comes from California where it was recently discovered that about two-thirds of those released from prison and placed on parole were being sent back to prison on purely "technical" grounds (e.g., no real crimes but things like testing positive for drugs). As a result of a study by a special Blue Ribbon Commission, the Department of Corrections began shifting millions of dollars from their institutional budgets to the parole budget, which in turn was directed toward the San Francisco Bay area, resulting in the creation of the Bay Area Services Network. This network in turn created a number of community-based programs, including the Supportive Living Program under the sponsorship of the Center on Juvenile and Criminal Justice (CJCJ). Initial reports from an evaluation by the Rand Corporation suggest significant reductions in the recidivism rate (from 60 percent to 45 percent).

On the juvenile level, a program known as the Detention Diversion Advocacy Project (DDAP), begun in San Francisco (and extended to the Washington, D.C. area), has shown remarkable success in dealing with "high risk" juvenile offenders, based upon an evaluation done by this author (a 50 percent reduction in recidivism rates). DDAP was the creation of the Center on Juvenile and Criminal Justice (CJCJ), which is an example of one of many non-profit organizations involved in creating alternatives. Citizens can easily become involved and even establish similar organizations within their own communities. For further information about CJCJ call 415-621-5661 (San Francisco) or 202-678-9282 (Washington, D.C.). Its web site is (

Randall G. Shelden is a Professor in the Department of Criminal Justice, University of Nevada-Las Vegas and author of a forthcoming book called Controlling the Dangerous Classes: A Critical Introduction to the History of Criminal Justice, to be published by Allyn and Bacon. He is currently conducting research for a book called Cashing in on Crime: The Crime Control Industry in America.

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