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The Bright Side of Deportation: Private Prison Stocks are Soaring!

Under a government which imprisons any unjustly, the true place for a just man is also a prison.

— Henry David Thoreau, Civil Disobedience

It turns out that the immigration cracksown that Trump’s ICE is pursuing, though hard on illegals and their families by producing terrible uncertainty for them, is not without its bright side.  The light that provides a bright side is shining on the shares of stock in the Geo Group and CoreCivic, and on jails in a number of Texas counties.

Geo Group and CoreCivic operate private, for-profit prisons.  Before DJT became president, they were on hard times.  For good reason.  In August 2016, the U.S. Department of Justice Office of the Inspector General issued a report that was highly critical of the way those companies treated prisoners entrusted with their care.  The report found that inmates in facilities run by those corporations “were nine times more likely to be placed on lockdown than inmates at other federal prisons and were frequently subjected to arbitrary solitary confinement simply because there was not space for them among the general population.”

Although placing them in solitary confinement so they would not add to overcrowding in the general prison population had the desired effect, solitary confinement is generally acknowledged to be equivalent to torture and has been repeatedly criticized for its excessive use in United States prisons.

According to the report, the Bureau of Prisons was using the private prisons on a large scale to “confine federal inmates who are primarily low security, criminal alien adult males with 90 months or less remaining to serve on their sentences.” The report stated that “in a majority of the categories we examined, contract prisons incurred more safety and security incidents per capita than comparable Bureau of Prisons institutions.”  It said that the contract prisons “do not provide comparable services [to those operated by the Federal Bureau of Prisons] do not save substantially on costs, and do not maintain ‘the same level of safety and security.’”

At almost the same time that that report was issued, Deputy Attorney General Sally Yates, issued instructions to federal officials to reduce the use of private prisons because of the falling prison population throughout the country. The result was that stock in CoreCivic and GEO, the two largest private prison companies in the United States, fell precipitously. The election of DJT reversed their fortunes.

The day after the election shares in CoreCivic rose 43 percent and share in GEO rose 21 percent.  The investors’ optimism was rewarded when on February 21, 2017, Attorney General Sessions, rescinded the order that the private prisons be phased out.  Following the announcement, the prison companies enjoyed another jump in share prices.

The order should not have been a surprise.  Notwithstanding the Justice Department report that was highly critical of the private prisons, DJT, for whom facts are notoriously unimportant, said: “I do think we can do a lot of privatizations and private prisons.  It seems to work a lot better.”  Of course, private prisons are not the only ones rejoicing in the prospect of more inmates, thanks to the increased attention being paid to illegal immigrants and their incarceration.  Jailers in small Texas counties are also excited.

Because of reforms to the criminal justice system, a number of Texas counties are having a tough time making ends meet because their jails are underperforming.  An underperforming jail is one located in a community in which the residents do not engage in sufficient criminal activity to provide residents for the local jails.

According to a report by the Associated Press, the current problem traces its beginning to the 1990s and the early 2000s.  Counties that were losing employment prospects for their citizens, addressed the problem by building new jails with lots of beds.  The plan was that, in addition to housing their residents, the jails could be rented out to other counties and the federal government when those entities found themselves short of space.

It was a great idea and worked until criminal justice reform took place and alternative sentencing provisions were adopted.  Now many of the counties that eagerly built new jails, find themselves trying to pay off the cost of construction without adequate occupants to pay the debt that was incurred to build them.

The good news for them is that since DJT has encouraged ICE to round up and jail illegal immigrants, the glut of jail space may soon vanish and cells that were empty and non-income producing, will once again be fully occupied with illegal immigrants and their families.  (In a speech delivered to Police Chiefs Association on April 11, 2017, Attorney General Sessions announced a number of increased enforcement policies including a provision that those who get married to avoid immigration laws, will be charged with offenses that carry a two-year mandatory minimum prison sentence.)

If, notwithstanding the prospect of new occupants, counties no longer want to maintain their facilities, they may be able to sell them to private prison companies that will use the space for housing illegal immigrants.

It’s a win-win situation for private prisons and Texas counties.  The only loser is the pre-Trump United States we knew and loved.

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