More Prisons Being Built

by Darren

Lately I can’t help but notice the fact that more prisons are being built. Even a purfunctory scan of the news will turn up stories such as this one about a new prison being built in Nevada by “Corrections Corp. of America”.

CCA’s (NYSE: CXW) new 1,072-bed Nevada Southern Detention Center is expected to house about 1,000 federal inmates and detainees from the United States Marshals Service as well as potential populations from U.S. Immigration and Customs Enforcement and the Federal Bureau of Prisons.

The new prison is located about 65 miles outside of Las Vegas.

The story goes on to tell us that Corrections Corp. of America operates 65 “facilities” that have a total capacity of 78,500 “beds”. This is a publicly traded company that is building more capacity for “beds” in anticipation of even larger numbers of prisoners in coming years.

As the largest operator of such facilities, CXW has amassed a market cap of $3.2 billion. That fact right there is enough to give me pause for thought. Keeping prisoners is an increasingly profitable business and growing employer, without many of the traditional problems of contemporary businesses. The “customers” are literally captive, and the the ways by which these companies are judged do not reward them for compassion.

Before CXW builds this prison in Nevada, they have been basically guaranteed a profit. The government has guaranteed CXW that at least 750 of their new beds will be filled.

When the government offloads the responsibility of caring for prisoners to private companies, it gives the appearance that they aren’t concerned with prisoner welfare, but are more interested in cost savings. Trouble is, the jury is still out when it comes to how substantial these cost savings really are.

Continued: More Prisons Being Built - Continued