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Home > The Glover Report > TGR: Guest Editorial: Privatized Prisons Are Big Business By Junious Ricardo Stanton

TGR: Guest Editorial: Privatized Prisons Are Big Business By Junious Ricardo Stanton

“Prison stocks also are valued on a “per bed” basis — which is based on the number of beds provided and the profit per bed. “Per bed” is really a euphemism for people who are sentenced to be housed in their prison. For example, in 1996, when Cornell Corrections went public, based on the financial information provided in the offering document provided to investors, its stock was valued at $24,241 per bed. This means that for every contract Cornell got to house one prisoner, at that time, their stock went up in value by an average of $24,261. According to prevailing business school philosophy, this is the stock market’s current present value of the future flow of profit flows generated through the management of each prisoner. This, for example, is why longer mandatory sentences are worth so much to private prison stocks. A prisoner in jail for twenty years has a twenty-year cash flow associated with his incarceration, as opposed to one with a shorter sentence or one eligible for an early parole.[47] This means that we have created a significant number of private interests — investment firms, banks, attorneys, auditors, architects, construction firms, real estate developers, bankers, academics, investors among them— who have a vested interest in increasing the prison population and keeping people behind bars as long as possible.” Catherine Austin Fitts Dillon Read and Company And The Aristocracy of Prison Profits http://dunwalke.com/introduction.htm

The United States of AmeriKKKa imprisons more of its citizens than any other nation on the planet. Currently almost two and a quarter million persons languish in local, county, state and federal prisons. Looking at the AmeriKKKan gulag we see some very disturbing trends aside from the disproportionate incarceration of people of color. Investments in the prison industrial complex, prison construction, privatization of prisons and public policies that encourage incarceration over intervention and treatment are fueling the rise of prison construction and incarceration at a time when even according to FBI statistics major crimes are decreasing! Nothing occurs in a vacuum. Those of us who comprehend the Law of Karma (cause and effect, sowing and reaping) know the large number of prisoners especially of people of color is the effect of causes put into action years ago by the ruling elites and their flunkies. They glean a slice of how this happened and the boardroom and public policy causes (read Catherine Austin Fitts revealing piece entitled Dillon Read and Company And The Aristocracy of Prison Profits at http://dunwalke.com/introduction.htm). Her insightful and well documented article reveals the causative factors in the private prison boom as it relates to just one financial firm, Dillon Read, a stodgy Wall Street private investment banking firm.

From Catherine Austin Fitts article we can extrapolate just how the real criminals have rigged the game and structured a gulag system that would make Stalin or Hitler blush with envy. Only in this case the prime motive is not oppression or repression of dissidents its money with an underlying tinge of racism. This is nothing new. Collusion between local and state governments and plantations, mining interests and corporations has a sordid history in AmeriKKKa. Horror stories abound about the abysmal and dehumanizing conditions these business arrangements between the government and moneyed interests created. Unfortunately, these business arrangements between governments, for profit private prisons and corporations are making a comeback. “A hundred years ago private prisons were a familiar feature of American life, with disastrous consequences. Prisoners were farmed out as slave labor. They were routinely beaten and abused, fed slop and kept in horribly overcrowded cells. Conditions were so wretched that by the end of the nineteenth century private prisons were outlawed in most states. During the past decade, private prisons have made a comeback. Already 28 states have passed legislation making it legal for private contractors to run correctional facilities and many more states are expected to follow suit.” US: America's Private Gulag by Ken Silverstein, Prison Legal News http://www.corpwatch.org/article.php. The article I just quoted was written in 2000.

Since then there has been a steady rise in the number of government and private prisons constructed but the privatization of prisons is increasing at an alarming rate. “At the start of Reagan's administration in 1980, there were approximately 501,886 prisoners in the nation's prisons and jails, according to the Bureau of Justice Statistics. In June 2001, there were 1,800,300, a nearly four-fold increase, according to the agency's data. Of this number, 803,400 were Black males and 69,500 were Black females.

One of the effects of this boom has been the shifting of federal funds from the minority and poor communities that export prisoners to poor white towns, which started "hosting" prisons in the 1990s as a means of escaping from economic despair. In fact, new studies are showing that in a society that ratcheted up its criminal penalties to control crime and place offenders out of sight and out of mind, the prison industry has begun to affect the political landscape.” Crime & Punishment How the US prison system makes minority communities pay http://www.prisonpolicy.org/news/crisis_july2002.shtml

To the ruling elites the clang of cell doors was also a big ka-ching for investors and corporate types looking to get rich but first they had to use their pull with the politicians to pass laws to make more necessary. “The “pop” is a word I learned on Wall Street to describe the multiple of income at which a stock is valued by the stock market. So if a stock like Cornell Corrections trades at 15 times it's income, that means for every $1 million of net income it makes, it's stock goes up $15 million. The company may make $1 million, but its “pop” is $15 million. Folks make money in the stock market from the stock going up. On Wall Street, it's all about “pop.” Prison stocks also are valued on a “per bed” basis — which is based on the number of beds provided and the profit per bed. “Per bed” is really a euphemism for people who are sentenced to be housed in their prison.

For example, in 1996, when Cornell went public, based on the financial information provided in the offering document provided to investors, its stock was valued at $24,241 per bed. This means that for every contract Cornell got to house one prisoner, at that time, their stock went up in value by an average of $24,261. According to prevailing business school philosophy, this is the stock market’s current present value of the future flow of profit flows generated through the management of each prisoner. This, for example, is why longer mandatory sentences are worth so much to private prison stocks. A prisoner in jail for twenty years has a twenty-year cash flow associated with his incarceration, as opposed to one with a shorter sentence or one eligible for an early parole.[47] This means that we have created a significant number of private interests — investment firms, banks, attorneys, auditors, architects, construction firms, real estate developers, bankers, academics, investors among them— who have a vested interest in increasing the prison population and keeping people behind bars as long as possible.


When you invest in stock, you make money if and when you sell the stock at a higher price than you paid for it. This would be true for the people who invested in Cornell stock, including Dillon Read and its venture funds. Cornell was run by a board of directors that represented the shareholders, particularly the controlling shareholders — in this case Dillon Read. The board is the group of people who decides what goes. Senior management officials, such as the founder and Chairman David Cornell, who run the company day to day, are also on the board. Most of the money they make comes from stock options that they get to encourage them to get the stock to go up for the investors. That means that what everyone who runs the company wants is for the stock to go up”. ” Catherine Austin Fitts Dillon Read and Company And The Aristocracy of Prison Profits http://dunwalke.com/introduction.htm The dye had been cast and all that was needed was for the moneyed crowd to make the connection with the politicians who would make public policy that would make their bank accounts blossom and prisons a major cash cow. “Much has been written about the use of the War on Drugs to intentionally disenfranchise poor people and engineer the centralization of political and economic power in the U.S. and globally, including an explosive rise in the U.S. prison population. The purpose of this story is not to repeat this fundamentally sound thesis. For those who are interested in more on this topic, I would refer you to my article and audio seminar “Narco Dollars for Beginners” as well as Michael Woodiwiss’ book Organized Crime and American Power (University of Toronto Press, 2001) and their associated bibliographies. [49]

What most people miss is the extent to which the day-to-day implementation of this intentional centralism is deeply pervasive and therefore deeply bipartisan. It receives the promotion and support from all political and social spectrums that make money by running government through the contractors, banks, law firms, think tanks and universities that really run the government. My intention for this story is to make clear how the system really works. A system in which a small group of ambitious insiders — who more often than not were educated at Harvard, Yale, Princeton and the other Ivy League schools — enjoy centralizing power and advantaging themselves. Paradigms of Republican vs. Democrat or Conservative vs. Progressive have been designed for obfuscation and entertainment. An endless number of philosophies and strains of religious and ‘holier than thou’ moralism are really put on and taken off like fresh make-up in the effort to hide from view a deeper, uglier face.” ibid. This is part of the ongoing class war in AmeriKKKa. These elites from exclusive universities who have backgrounds in banking, law, intelligence and politics make the rules and then initiate programs and public policies designed primarily to fatten their portfolios and bank accounts.

As Catherine said, it is a bipartisan effort. Bill Clinton the man our “Negro leadership” loves so much was a key figure in the prison boom which led to the incarceration of hundreds of thousands of black and brown folks across the nation. “The Clinton Administration took the groundwork laid by Nixon, Reagan and Bush and embraced and blossomed the expansion and promotion of federal support for police, enforcement and the War on Drugs with a passion that was hard to understand unless and until you realized that the American financial system was deeply dependent on attracting an estimated $500 billion-$1 trillion of annual money laundering. Globalizing corporations and deepening deficits and housing bubbles required attracting vast amounts of capital. Attracting capital also required making the world safe for the reinvestment of the profits of organized crime and the war machine. Without growing organized crime and military activities through government budgets and contracts, the economy would stop centralizing. The Clinton Administration was to govern a doubling of the federal prison population. [50] Whether through subsidy, credit and asset forfeiture, kickbacks to state and local government, Five Years Later: Do you Feel Safer Yet?" or increased laws, regulations and federal sentencing and imprisonment, the supremacy of the federal enforcement infrastructure and the industry it feeds was to be a Clinton legacy. ” Dillon Read and Company And The Aristocracy of Prison Profits http://dunwalke.com/introduction.htm It was under our man Bill Clinton the one our sell out leadership like to call “the First Black President” that increasing numbers of Africans in America were incarcerated compared to whites who committed far more serious crimes, a fact which was pointed out to him by the Sentencing Project but he elected to do nothing to rectify.

“About three-quarters of new admissions to American jails and prisons are now African-American and Hispanic men. This trend, combined with an increasingly privatized and profitable prison system run largely by whites, makes for what Jerome Miller, a former youth corrections officer in Pennsylvania and Massachusetts, calls the emerging Gulag State. Miller predicts that the Gulag State will be in place within 15 years. He expects three to five million people to be behind bars, including an absolute majority of African-American men. It's comparable, he says, to the post-Civil War period, when authorities came to view the prison system as a cheaper, more efficient substitute for slavery. Of the state's current approach to crime and law enforcement, Miller says, ‘The race card has changed the whole playing field. Because the prison system doesn't affect a significant percentage of young white men we'll increasingly see prisoners treated as commodities. For now the situation is a bit more benign than it was back in the nineteenth century but I'm not sure it will stay that way for long.”

This pattern of creating policies that criminalize and incarcerate increasing numbers of black and brown people for longer periods will continue unless and until we do something about it! Draconian laws, using government manufactured terrorism as a scare tactic to usher in a bourgeoning police state will swell the prison ranks even more unless we take serious action. “Blacks have also been disproportionately affected by the national ‘war on drugs’, carried out primarily through the arrest, prosecution and imprisonment of street level drug offenders from inner city communities. In 1996, for example, blacks constituted 62.6 percent of all drug offenders admitted to state prisons. In at least fifteen states, black men were sent to prison on drug charges at rates ranging from twenty to fifty-seven times those of white men. Blacks are prosecuted in federal courts more frequently than whites for crack cocaine offenses, and thus as a group have felt the effects of the longer sentences for crack versus powder cocaine mandated in federal law. Racial profiling and other forms of unequal treatment of minorities by the criminal justice system have further contributed to the over-representation of minorities in the incarcerated population. Minority youth are treated far more harshly compared to similarly situated white counterparts within the juvenile criminal justice system. (”Race and Incarceration in the United States Human Rights Watch Press Backgrounder: http://www.hrw.org/backgrounder/usa/race).

A well informed community is the first step. Just knowing about it isn’t enough; we have to take serious and coordinated action before it’s too late! Link Catherine Austin Fitts’ article read it thoroughly and you’ll see it not just about some super rich white boys making mad money off of private prisons construction, it’s about political corruption, money laundering, land acquisition and regentrification of our neighborhoods on a national and international scale!! Get involved, don’t allow the criminals to expand their gulag system here in AmeriKKKa (Bu$h and Co. have already outsourced CIA prisons and torture chambers overseas). Given the widespread practice and problem of racial profiling and the need for the ruling elites to keep their private prisons filled, none of us is safe!

Junious Stanton can be reached at: junious@harambeeradio.com. He hosts the weekly Digital Underground Radio Show on Sundays at: http://harambeeradio.com/digital.htm

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