The US Border Crisis is Giving Private Prisons a Boost

Published April 28th, 2020

In 2016, private prison stock prices are plunging. Plagued by controversies, policymakers have finally stepped up to end the practice. Prison activists who advocated against for-profit prisons are on the brink of success.

Then Donald Trump entered the picture. Almost overnight, the private prison industry made a full comeback. Private prison stocks rebounded and have been at its highest in years.

But what caused this dramatic turnaround?

Trump’s hardline policies on immigration, that’s what.

Migrants from neighboring countries regularly seek asylum in US borders. Before the Trump administration, most people who are caught illegally crossing the border are not detained. Instead, they are shackled with ankle monitors and given access to legal representation.

But with a stricter stance on immigration, more and more migrants are detained in US private prisons. In fact, they have become the country’s default detention centers for illegal immigrants.

These detained migrants have become the private prison’s new cash cows. To fully understand how this works, let’s first look at how private prisons earn income.

How Private Prisons Make Money

Private prisons were founded back when the country’s drug problem was on the rise. In the 80s, many Americans are getting locked up due to drug charges. As a result, prisons and jails across the country were struggling with overpopulation.

With cramped cells came an onslaught of other problems which led to violent riots. This prompted the government to privatize the country’s prison facilities. They believed that it will not only decongest prisons but will also save money for the government.

Under this arrangement, the government will pay private prisons for every inmate they take in. It’s estimated that they can charge up to $150 per inmate per day. In return, they will provide accommodation, security, food and other things necessary for the welfare of the prisoner.

But will the government agree to such terms?

As long as it’s cheaper than what the government would spend if the prisons are publicly run, they will. Say, the government estimates the upkeep of prisons at $200 per inmate per day. If they delegate this to private prison companies, they’d be able to save $50 per day per inmate.

With over a million inmates spending years behind bars, the government can save millions of dollars per year. On paper, these all sound great. If only private prison companies kept their end of the bargain.

Since it’s a business enterprise, private prisons are keener on making money than rehabilitating inmates. They cut costs by understaffing prisons and, providing poor facilities and medical treatments. They are also accused of lobbying for harsher punishments to increase income.

Their low-cost, high-profit approach often leads to jailbreaks and violent riots. Studies show that assaults in private prisons are double than those in public facilities. A report also disclosed that the latter tend to be a lot safer than their private counterparts.