“Make a law, make a business.” ~Old New Jersey street saying
By Catherine Austin Fitts
I thought it worth noting that Corrections Corporation of America (known as CCA, their ticker symbol is CXW) outperformed the S&P while the Republicans used the Ebola Shriek-o-Meter to ensure the Senate majority victory in the Mid-term elections. The stock fell back down to parity with the S&P on the six month to date chart after the elections but seems to be headed up again. Perhaps Ferguson and constant pictures of tensions with police in major media are helping?
Prison stocks essentially trade based on the number of prisoners multiplied by the annual profit per year per prisoner. CCA has 67 facilities with 92,500 beds. Their market value is $4.32 billion. That means that investors assign a value of $46,702 per bed.
When I wrote my case study of stock profits on private prison companies, the per bed value of the company in question was $25,000. As the stock market rises, the pressure to deliver more prisoners rises. Problem is that crime has been falling. That is one of the reasons that prisons have been filing up with non-violent offenders. It is worth asking what the President’s immigration proposals will do to the prison population. Will it decrease the prison population related to illegal aliens? Do we need offsets for an anticipated drop?
This is all very expensive for taxpayers. I estimated that in the 1990’s, ten people had to work their entire lives to pay the taxes to fund the costs of one prisoner’s journey through the system. Using that estimate, to deliver $4.32 billion of value to CCA investors (including our pension funds and church endowments), 925,000 Americans will have to work their entire lives to pay the taxes to fund the related government contracts.
As you watch pictures of rioting, ask yourself if this is a real riot, or whether rioters are being paid or entrained to produce a reality TV show designed to get you to buy a series of false pictures of reality.. And before you give your support to increased enforcement, mandatory jail terms and tougher sentencing think again. If we round up a lot of poor people and put them in prison, each prison sentence will put 10 Americans in financial prison.
Crime pays? Not for everyone.
Related Reading:
Dillon Read & Co. Inc. and the Aristocracy of Stock Profits
See: In this case study of stock profits on a prison company, for more on profits per bed see these two chapters here and here.
