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Privatization of Prison Industry in the United States Essay

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Updated: Mar 29th, 2022


Globalization forces of free market, coupled with political will, have encouraged private investors to venture into the criminal justice system and look for investing opportunities in the United States. In the criminal justice system, investors have found a lucrative business opportunity to invest in the prison system since there has been increasing population of inmates that placed extra burden on the government budget. Moreover, due to public demand to fight crime, there has been increasing cases of arrests made by law enforcement system, which has compelled the prison system to expand and accommodate the increasing population of inmates.

Due to the government’s inability to cope with increasing population of inmates by expanding prison facilities, privatization became an option. According to Nossal and Wood (2004), increasing population of inmates, economic crisis that led to budget deficits, overcrowding in prisons, and the need to reform the prison system are factors that contributed to the emergence of private prisons (p.3). Due to economic factors, the government found out that it was extraordinarily expensive to expand and operate new prisons, while the private sector was ready to provide the required prison services at a cheaper cost. Therefore, what are historical trends of the prison privatization, and its effects on the prison system, staff, and inmates?

Increase in Prison Privatization

Due to economic reasons, privatization of prisons across the United States has been increasing tremendously for the last four decades. Between 1970 and 1980, population of inmates increased exponentially, because criminal justice system was unusually aggressive in fighting drug trafficking, which was a substantial criminal activity facing the United States then. Increased population of inmates demanded vast resources to expand and operate the prison system, but the government was not able to inject extra funds in the system since there have been budgeting deficits. Following the revelation that private prisons are cheaper to operate and maintain, politicians advocated for the privatization of prisons as a way of trimming government expenditure on the prison system. In addition, human rights movements had criticized the public prison system for having poor facilities and overcrowding of inmates that resulted into mistreatment of inmates. According to Greene (2000), the public prison system had deficiencies in that there were staffing deficiencies, poor correction facilities, inefficient security procedures, and poor classification of inmates amidst the challenge of increasing population of inmates (p.2). Thus, due to the inability of the government to carry out comprehensive reforms, it delegated the responsibility of expanding and operating extra prisons to the private sector.

Moreover, the globalization issue of free trade and free market encouraged investors to venture into every aspect of the economy so long as they could make viable investments. Given that privatization of institutions has been a political ideology to enhance economic growth and development, politicians perceived that privatization of prisons was the only way of reforming the prison system as well alleviating burden from the government. Economists predicted that the government would save many resources and accrue more taxes from the private sector. Thus, proponents of prison privatization argued that private prisons are not only cost-effective, but also operate quite efficiently and offer quality services that meet international standards; something that public prisons could not achieve. Greene (2000) argues that, by 1997, the prison industry in the United States had approximately 64,000 inmates and yielded revenues above $1 billion (p.3). This showed that further privatization of prison industry can yield more profits to investors and extra revenues to the government hence stimulate economic growth and development. Currently, the inmates in private prisons are staggering at 130,000, meaning that the current revenues are approximately $2 billion.

Historical Trend and Effects Privatization

The ever-increasing population of inmates and the need to privatize various sectors of government as an economic strategy led to the privatization of prison industry during 1970s and 1980s. In early 1970s, crimes increased exponentially due to rampant drug trafficking, which saw citizens and politicians demand aggressive and stringent measures against criminals. Law enforcement agencies began a massive crackdown on drug traffickers and other criminals that doubled the number of inmates and overstretched the prison facilities. Privatization of the prison industry began gradually when the government subcontracted prison services.

Eventually, private investors realized the lucrative opportunity of managing prison industry and demanded full contracts. According to Cheung (2004), by 1984, the Correction Corporation of America became the first contractor to privatize prison industry in Hamilton County and subsequently offered to privatize entire prison industry in state of Tennessee at a cost $200 million (p.1). For the past three decades, about 50 states have contracted their prison industry to private sectors, raising the population of inmates to about 130,000, but the figure is increasing exponentially. From 1987 to 2001, population of inmates in private prisons has been increasing at the rate of approximately 4000%, which means privatization of the prison industry is occurring at an unprecedented rate relative to expansion of prison facilities by the government.

Privatization of prison industry has a significant impact to the prison system because it reduces costs of operating and managing prisons. Studies have found out that, the private sector can significantly reduce costs of running prisons and enhance the quality of services because it can design innovative management strategies to achieve economies of scale, which ultimately leads to reduced costs of imprisonment. Since staff is an integral part of the prison industry, enhanced management strategies means that staff will have appropriate working environment where they can not only improve their management skills, but also get value for quality services they offer in the private sector. Jing (2006) argues that, private prisons offer cheap and quality services that are free from escapes, violence, homicides, riots, overcrowding, and physical and sexual abuse that are rampant in government prisons (p.167). Hence, inmates present in private prisons receive appropriate corrective measures that effectively integrate them to the society.

The trend of privatizing prison industry is hugely positive because it is not only economical, but also enhances the quality of corrective measures that prepare inmates to become members of society. Moreover, private prisons act as an expansion of the prison system hence provide room for increasing population of inmates and prevent overcrowding in government prisons. Nossal and Wood (2004) assert that, privatization of prison industry is in tandem with globalization ideology of liberalized markets that encourage investors and stimulate economic development (p.23). This has become evident in the 21st century where private prisons make up of about 130,000 inmates, yields about $2 billions in revenues. Thus, privatization of prisons is a healthy trend that provides the basis for carrying out comprehensive reforms within the prison system and entire criminal justice system.


Increasing population of inmates, poor management of the prison system by the government and political wave of privatization has led to the emergence of private prisons across the United States. Because private prisons are cost-effective and provide quality corrective measures to inmates, the government decided to contract part of the prison system to the private sector to alleviate its burden. In 1984, the Correction Corporation of America became the first private company to offer prison services at Tennessee State, which set the stage for more investors to venture into prison industry. Due to efficiency and effectiveness of private prison industry in offering prison services, the prison sector has expanded tremendously to cover about 50 states with about 130,000 inmates who have been increasing at an unprecedented rate of 4000% since 1987. Therefore, since privatization of prisons is in tandem with economic strategies of globalization, its co-effective and provides quality services to inmates, it is a fundamental reform in prison industry.


Cheung, A. (2004). Prison Privatization and the Use of Incarceration. The Sentencing Project, 1-6.

Greene, J. (2000). Prison Privatization: Recent Development in the United States. Center on Crime, Communities and Culture, 1-9.

Jing, Y. (2006). Prison Privatization in the United States: A Study of Causes and Magnitude. Chinese Publicly Affairs Quarterly, 2(2), 157-183.

Nossal, K., & Wood, P. (2004). The Raggedness of Prison Privatization: Australia, Britain, Canada, New Zealand and the United States Compared. International Prison Conference, 1-31.

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