The New Slave Ships

By Ron Jacobs

How many of us are aware of the big business of incarceration? If you are a prisoner who is housed in an MDU, do you know who makes these monstrosities? Are you aware of the profit involved in their manufacture and sale? Do people really understand the amount of money involved in the lease and sale of lands to prison facilities or the cash generated by providing prison services such as food and transport? Where does this money come from and where does it go?

In a system dominated by no motivation other than profit, it should come as no surprise that the lives of those who have little in the way of assets are looked at in terms of how they can be exploited. For most of us, this means the exploitation of our labor in the global factory with the illusory promise of eventual financial independence as our reward. Those at the bottom of capital's hierarchy -- the poor and disenfranchised-- rarely entertain such illusions. Instead, their lives are spent just struggling to survive and stay out of prison. Unfortunately, staying out of prison is becoming more difficult, especially for the disenfranchised in the United States. Why is this so? Primarily because the men and women behind the latest push for profit have realized that more money can be made from locking up the poor and unemployed than by helping them on the outside. To this end, many prisoners have been put to work at low wages while taxpayers foot the bill and prisons and their functions have been privatized. In order to profit from these strategies, more prisons must be built and be filled to (or above) capacity. Consequently, the corporations who build and service prisons lobby for laws calling for greater incarceration and support politicians who write such laws. In addition, they encourage state legislatures to turn over their penal systems to their businesses and provide cozy real estate deals to facilitate the building of more prisons. Perhaps Corrections Corporation of America (CCA)--one of the largest private prison management concerns in the world--says it best with their advertising slogan: "If you build it, they will come." What's left unsaid here is that CCA and its corporate cohorts will do their best to insure that they do come by performing functions such as offering their detention services to states that are short on prison beds. It is this philosophy that lends credence to the analysis popular among prison abolitionists that compares the current imprisonment drive to the Atlantic slave trade where humans (not their labor) were considered capital. In other words, it is the prisoners themselves that turn a profit and not any value they might produce through their labor.

Sodexho/Marriott and CCA

Thanks to recent protests in Seattle, Washington, DC, and elsewhere around the world, most readers are aware of the creeping spectre of globalization.

Fewer are aware of how this phenomenon affects prisons. However, as students at various campuses made clear this past academic year in their protests against their campuses' food service agreement with Sodexho/Marriott, the connection is as obvious as the food on their plate.

In 1998, Marriott and the French conglomerate Sodexho merged operations. Besides J.W. (Chairman of the Board and Chief Executive Officer) and Richard Marriott (who is also Chairman of the Board of First Media Corporation and director of the Potomac Electric Power Company), the new Marriott board includes Dr. Henry Cheng Kar Shun (Chairman, New World Infrastructure Ltd. And Tai Fook Gp. Ltd, and director of HKR International--all publicly-held Hong Kong based companies), Floretta McKenzie (Chairwoman and CEO of The McKenzie Group, an educational consuting firm), Harry Pearce (Vice Chairman of General Motors and a director of Hughes Electronic Corp., American Automobile Manufacturers Assoc. and MDU Resources Group), Mitt Romney (director and CEO of the private investment firm Bain Capital, Inc., director of The Sports Authority, Inc, and Staples, Inc.), Roger Sant (Chairman of the Board of the global power company AES Corporation), Lawrence Small (President of Fannie Mae--a congressionally chartered mortgage financing corporation), and William J. Shaw, who has been with Marriott since 1979. Included as part of the merger package was the incorporation of CCA into the Marriott sphere. Earlier, in 1994, CCA had entered into a strategic alliance with Sodexho which provided each company with a 50% share of CCA. This alliance is not restricted to just France and the United States, either. In fact, as of 1999, Sodexho/Marriott/CCA has managed or manages prisons in the United Kingdom, France, Puerto Rico and Australia, and hopes to expand into eastern Europe, Germany, Latin America and Canada. In 1999, Sodexho/Marriott showed a net income of 60 million dollars and had total assets of over 1.3 billion dollars. In the U.S., CCA manages more than 50% of the existing private prison facilities and added over 18,000 beds in 1998 alone, bringing their total to over 70,000 throughout the world. In addition, the corporation has a special working arrangement with Prison Realty Trust -- a company which provides financing, design, construction and renovation of new and existing jails and prisons that it leases to both private and governmental managers. Prison Realty Trust is a real estate investment trust (REIT) called Prison Realty Trust. REITs were originally legislated to help low-income communities purchase properties. However, they are now also a prime means become for different corporations that manage real estate to garner substantial tax savings. They are not taxed by the federal government as long as all the profits are distributed to the shareholders. Prison Realty Trust purchases prisons from CCA and leases them back at cost plus 5 percent, giving the corporation a two-way tax break-first on the REIT, second on the lease CCA pays to the REIT. In essence, CCA is paying shareholders with taxpayers' money. CCA has spent lavish sums on political candidates ranging from Tennessee's state GOP candidates to providing contracts and employment for officials in Ohio and Washington, D.C.. Prison Realty currently owns or is developing 50 correctional and detention facilities in 17 states, the District of Columbia and the United Kingdom and recently entered into an agreement with Pacific Life Insurance that, in effect, bailed Prison Realty out to the tune of 200 million dollars.

American Buildings Incorporated

American Buildings Incorporated (ABI) has been in the metal construction business since 1947 and is headquartered in the town of Eufaula, Alabama. Recently, it entered into the prison construction industry with the development of its modular dorm units or MDUs. As Joseph Houck (the inspiration behind Southland Prison News-a prison journal written primarily by prisoners covering the south and northeastern U.S.) described these units to me in a letter, they are "not just the open 'dorms' containing 180 inmates each. It's the whole compound: administrative building, chow hall, medical unitů.". He further estimates the total cost for a 1,250 bed prison to be 35 million dollars and that there are probably more than 200 in existence. Perhaps this helps to explain their 1998 earnings increase of 16%. In dollar amounts, this translates to over $455 million in sales and income from continuing operations. In May of 1999, ABI was acquired by the Canadian-based corporation Onex (annual sales of $5.9 billion), which in turn formed a holding company called Magnatrax, of which ABI became a stand-alone subsidiary. Onex's Board of Directors includes the Canadian business leader Serge Gouin of Salomon Smith and Barney. ABI's directors include William Selden and Douglas Newhouse of the investment firm Sterling Ventures, Harold Levy of Iridian Asset Management, Robert Shapiro of RFS & Associates and Kendrick Wilson III of Goldman, Sachs & Co. As one can plainly see, the acquisition by ONEX clearly took ABI out of family hands and placed it in the international marketplace. The transaction had a total value of around $271 million. If the merger of Sodexho/Marriott/CCA is any indication, the acquisition of ABI by ONEX will probably help the company to expand its business overseas, creating an even greater presence of U.S. industry in the international incarceration industry.

Another player in the private prisons market is Wackenhut Corrections Corporation. Wackenhut may be the fastest growing corrections management concern today with a reported first quarter revenue increase in 2000 of 33.9 percent to $130.5 million from $97.4 million in the first quarter of 1999. Much of this increase can be attributed to the award of a contract by the U.S. Bureau of Prisons to design, construct and manage a new 1,200-bed facility in North Carolina. Wackenhut was founded in 1954 by George Wackenhut, a former FBI agent and is involved in the private security business on many fronts--in nuclear facilities, airports and municipalities, and corporations such as Exxon. It also manages the federal Job Corps. Currently, Wackenhut is the industry leader in the private prison international market, with awards or contracts for over 55 percent of the prison beds which have been privatized in countries outside of the United States. It employs over 50,000 personnel and has annual earnings of approximately 1 billion dollars.

Obviously, these are huge sums of money and, if current incarceration trends continue, they are sure to grow. If other aspects of globalization replicate themselves in the criminal justice arena as they have in every other arena: for example, the homogeneity of government policy (thanks to WTO-enforced rulings against so-called barriers to free trade) and the ever-growing disparity between the world's wealthy and the rest of us, one can be certain that these corporations will be willing and ready to turn a profit from the new crop of prisoners certain to arise, no matter where they may be located.

Sources:

Hoover's Online
New York Times
Wall Street Journal
AFSCME Corrections United Website