MISERY MARKET SET TO TAKE A LONG DIVE

Last week, a broad-based coalition of religious and civil rights
organizations, student activists and labor groups from across the
country took to the streets of Nashville, Tenn., to protest one of the
more disturbing and degrading social trends of the last decade:
America's growing reliance on private prisons. The headquarters of
Corrections Corporation of America is located in Nashville.

"The industry of warehousing people," said one of the protest's
leaders, Harmon Wray of the United Methodist Church, "has presented a
temptation to those who would profit from the punishment of human
beings, leading to perhaps the most ominous illustration of the prison
industrial complex at work."

The 1990s were a boom time for the business of crime and punishment,
fueled by the incarceration of large numbers of nonviolent drug
offenders. We now spend close to $35 billion a year maintaining the two
million prisoners this country has living under lock and key. And
riding the crest of this corrections boom was a handful of corporations
-- led by CCA and its chief rival, Wackenhut Corrections -- that saw this
growth in the criminal population not as a national tragedy but as a
chance to make a quick buck. Or a few hundred million of them. Wall
Street agreed, and the stocks of these private prison companies soared.

So did their share of the inmate market. The private sector now handles
more than 120,000 beds, amounting to 6 percent of the U.S. prison
population, an eightfold increase since 1990. Much of this growth was
driven by good old-fashioned entrepreneurship. CCA would just build its
new prisons on spec and then market the fresh beds to states and local
municipalities unable to accommodate burgeoning inmate populations.
Left unasked was the question of what it says about a country when
businesses and investors are gambling their money on the expectation --
and hope? -- that there will be more and more Americans running afoul of
the law. It's the misery market, which has, until recently, been flying
as high as all the other ones.

But there are unmistakable signs this market may also be heading for a
correction. Due to a combination of overbuilding, well-publicized a-
buses and the renewed ability of no-longer-cash-strapped governments to
erect their own jails, private prisons across the country have been
left with a surfeit of empty beds and a rapidly shrinking bottom line.
The stocks of both CCA and Wackenhut have plummeted, with CCA barely
avoiding going belly up this spring after a $265 million loss.

Government officials across the country are finally taking a closer
look at the effectiveness of private prisons. And what they are finding
is not a pretty sight: reports of rampant physical and sexual abuse of
inmates; lax security leading to an unusually high number of escapes;
high-profile murders of inmates and guards and, above all, cost-cutting
measures that one state audit said amounted to "borderline deliberate
indifference."

The attempt to let the profit motive drive the care and rehabilitation
of prisoners has created incentives that are truly perverse. Private
prisons, after all, operate like hotels: The more beds they fill and
the longer their =93guests=94 stay, the more money they make. As a result,
companies have shown a reluctance to reward inmates for good behavior
so as not to lose their source of revenue before they absolutely have
to.

Given such abuses, growing numbers of states are reconsidering the
money-saving wonders of private correctional facilities. And North
Carolina recently took over management of two private facilities run by
CCA, citing chronic "understaffing and the inadequate provision of
prison security and safety, education, medical and mental-health care,
substance abuse and work programs."

In a sign of further trouble for the prisons-for-profit industry,
student activists, so often in the forefront of movements for social
justice, have begun protesting the connection between private prisons
and the food being served at their schools. It turns out that Sodexho
Marriott Services, the food-service provider for more than 500 U.S.
colleges, is a subsidiary of Sodexho Alliance, a big-time investor in
CCA.

Currently active on more than 40 campuses, Not With Our Money is a
national campaign that seeks to stem the flow of the more than $1.2
billion in annual revenue students provide Sodexho Marriott by getting
school officials to give Marriott the boot. That's what happened at
Washington's Evergreen State College, which last month responded to
student protests by breaking off negotiations on a 7-to-10-year
contract with Sodexho-Marriott.

When the bottom line dominates all other concerns, it's the rest of us
who pay the price. After all, would you really like to have to shop
around and negotiate for the cheapest policeman to guard your block?
It's time for the misery market to take a dive.