DOING COMPANY TIME: The Privatization of Prisons

Wednesday, February 10, 1999

The United States now has approximately 1.8 million people behind bars. Ninety thousand (about 5 percent) are held in private prisons. Is 5 percent too many or too few? Lance Corcoran, Vice President of the California Correctional Peace Officers Association, J. Mike Quilan, Vice Chairman of the Board at Prison Realty Trust, and Eric Schlosser, Correspondent at the Atlantic Monthly discuss the politics of the privatization of America's prisons.

Recorded on Wednesday, February 10, 1999

ROBINSON Welcome to Uncommon Knowledge, I'm Peter Robinson. Our show today: The privatization of prisons. Prisons, of course, used to be run entirely by governments— state, local, and federal— but in recent years companies have formed to run private prisons, acting in effect as subcontractors to government penal systems. How do private prisons operate? Well, in many ways they're not all that different from hotels (rings a bell). Like hotels, private prisons offer beds, meals, television, and, as in hotels, in private prisons the difference between running at a profit and running in the red comes down to this: occupancy rates. In private prisons, in other words, as in hotels the management wants to fill all its space and keep it filled. Hotels compete for high occupancy rates by offering lower prices and better service. Even at a Motel 6 these days you can watch cable television and go swimming in a pool. How do private prisons compete for high occupancy rates? That is the issue.

With us today, three guests. Mike Quinlan is Vice-Chairman of Prison Realty Trust. He argues that private prisons compete by offering safe, well-run prisons at a lower cost than their government counterparts. Lance Corcoran, Vice President of California's Correctional Peace Officers Association, argues instead that private prisons compete by staffing up with cheap, unqualified guards and administrators. And Eric Schlosser, a correspondent for the Atlantic Monthly, argues that private prisons will too often be tempted to compete by manipulating the political system; in other words, by engaging in corruption. Time now to check in with our guests (rings bell).

LOCKING DOWN PROFITS

ROBINSON The United States now has about 1.8 million people behind bars. About ninety- thousand of those, or about five percent, are behind private bars: they're in prisons that are privately owned or managed. Is five percent too much, or too little? Lance?

CORCORAN I think it's too much.

ROBINSON Five percent is too much.

CORCORAN Five percent is far too much.

ROBINSON We'll come back to the reasons in a minute. Mike?

QUINLAN I think it's too little.

ROBINSON You want to go up to a hundred percent?

QUINLAN No, I think probably fifty percent would probably be the right number.

ROBINSON Okay. Five percent too much, fifty percent the right number. Eric?

SCHLOSSER It's too much.

ROBINSON It's too much. You want zero?

SCHLOSSER In prisons, close to zero. I could see a role for the private sector in drug treatment and maybe community-based corrections. But prisons: zero.

ROBINSON You want zero too, I'm assuming.

CORCORAN I would go along with Eric, there I think that when it comes to the incarceration function, when you're talking about prison in a classical sense of you're bringing people in for long terms, regarding rape, murder, that type of thing, I think private has no role.

ROBINSON Putting bad guys away for a long time.

CORCORAN Privatization has no role in that whatsoever.

ROBINSON Okay. Mike, the notion of private prisons is relatively new.

QUINLAN The concept was developed by the founders of Corrections Corporation of America— Doc Krantz, Tom Beasley, and Don Hutto— and they believed that there was an opportunity to serve the taxpayers, in a sense, and government by reducing the costs of incarceration and probably increasing the quality of the job that's being done.

ROBINSON Who are your biggest clients?

QUINLAN Biggest clients are counties and states, also the federal government is a big client of Corrections Corporation of America...

ROBINSON And what are the services that you provide?

QUINLAN Well, both ownership of the buildings as well as operations of facilities at all levels— at minimum, medium, high security...

ROBINSON So you'll actually subcontract the operation of a prison even if the ownership of a prison remains in the hands of a state? You'll run it?

QUINLAN Yes.

ROBINSON But you're also capable of building and owning your own facilities?

QUINLAN That's correct.

ROBINSON You do that too?

QUINLAN Yes we do.

ROBINSON Okay. I'm the governor of... Transylvania, as a small— you might not have heard of it, nestled in the Rocky Mountains— why do I come to you?

QUINLAN Well, first of all, during the period that we're talking about, 1983 to 1999, there were forty states that were under court order, federal court orders, for conditions of confinement or overcrowding, and they were concerned about how they were going to solve the problems, whether on a cost basis or on a speed of solution basis or on a flexibility of giving them more options basis...

ROBINSON Eric. What's wrong with that?

SCHLOSSER Well, this summer the Justice Department released a study of private prisons that showed there really is no strong evidence that they are less expensive than public prisons. And I think it's very important to say at the outset that private prisons are not a new phenomenon. Corrections Corporation of America in the early 1980s is the first modern private prison, but throughout the nineteenth century in this country we did have private prisons. The first prison in the state of California was a private prison: San Quentin was built and operated by a private company, and the state took it over after a decade because of the abuse of inmates and exploitation of inmates. And that happened throughout the United States in the nineteenth century, especially in southern and western states where inmates were contracted and leased by governments to private companies and traded, much like slaves had been traded.

ROBINSON Wait a minute. Is Eric claiming that those sorts of nineteenth century abuses are still possible today?

WELCOME TO HARD TIME

ROBINSON The private prison company gets paid per head, so they have an incentive to go out and find inmates. And that leads to abuses? There aren't enough inmates to go around?

SCHLOSSER I think that introducing the profit motive into incarceration when you have complete authority over a person's life is a very dangerous precedent. Now having said that, I think that CCA and some of the private prison companies right now actually have better facilities than many state prisons. But that's more of an indication of how bad many of our state systems are at the moment. And the private prisons are important because even though it's only ninety thousand, there were none, essentially, fifteen years ago, and the growth is exponential. And the profit motive is creating a dynamic so that the growth of this industry may not be related to its actual need.

ROBINSON Lance, what have you got against Mike's company, Mike's business?

CORCORAN I don't have anything against Mike's company. I guess the notion of private prisons is offensive to me on a number of levels. First, financial. I don't think that... I think their cost-savings estimates are grossly exaggerated.

ROBINSON Hold on. Are you guys less expensive or not?

QUINLAN Absolutely. But the research has gone from the savings of zero percent up to a savings of up to fifty percent. The research, yes: the cost-savings are debatable because some of the comparisons maybe were not apples to apples comparisons. But, the competition that goes into the marketplace when a private company enters that particular jurisdiction reduces the cost of government services in a very dramatic way. Government starts looking at its own costs and starts looking at ways to cut so that the comparisons are always advantageous to the taxpayers so that the cost-savings, even though it's not maybe twenty percent in all cases, does drive down the cost of government services as well as for the private providers.

(several voices)

CORCORAN ...If there's any advantage to privates getting into it, if it makes public more efficient, more accountable, I think that's wonderful. But we talked about the financial, which is just one part of the picture. Next you've got legal, as to whether or not it's even legal for the government to basically cede its responsibility to a public corporation. And lastly, if I could finish, it's the moral issue here. I mean, even if it's legal, even if it's financially good for the taxpayer, I mean it comes down to an issue: should we. Should our citizens look at a patch on a correctional officers uniform and see Disney's Prison World, or McPrisons, or Acme Prison Corporation. I don't think that sends a good message and I don't think that's part of the criminal justice system.

ROBINSON Lance thinks that private enterprise has no place in the prison system, and Eric seems to agree. How come?

JOINT TAX RETURNS

ROBINSON You published a long piece in the Atlantic Magazine in December. You quote one of the founders of CCA, a fellow called Thomas Beasley. Now I'm quoting you: "Beasley told a magazine his strategy for promoting the concept of private prisons, ‘You just sell it, like you were selling cars, or real estate, or hamburgers.'" Now you're quoting him with evident disdain.

SCHLOSSER If you look at Adam Smith and the free market, free market principles, you have thousands and thousands of individual consumers making anonymous choices that determine what the market's going to do. If you're running a private prison company, there aren't thousands and thousands of consumers. There's a very limited number of consumers, and those are state governments, local governments, and federal government.

ROBINSON It'd still be a few hundred, though, right?

SCHLOSSER Essentially, the private prison industry is completely dependent upon taxpayer money, and business with the government. In many respects, it's much more similar to the Chinese- or Soviet-style command economies where former officials are running companies that do business with the government and have formed a very close relationship. And my greatest fear about the private prison industry isn't that it's a business making profit. It has to do with the potential for the corruption of our criminal justice system by money. And that extends to the public officials who are making the decisions. The decision whether or not to be going with a private prison company is made by correctional officials, and it's made by legislatures, and if you look at where these private prison companies do business... I mean, in Tennessee, for example, which is the headquarters of CCA, CCA is the largest single contributor in political donations to the legislature in Tennessee. And they poured a lot of money in the last election into trying to put out of office people who in the legislature had questions about the private prisons in Tennessee. So I think when you have a number of companies bidding for one government dollar, that's when you have a great deal of potential for public corruption.

ROBINSON But doesn't it bother you in exactly the same way that General Motors and Ford make contributions to political action committees?

SCHLOSSER I think that...

ROBINSON I want to know what's different about prisons.

SCHLOSSER I'll tell you what's different. There's enormous public corruption in the building of highways and roads, and lots of payoffs and kickbacks, but you're building a road. We're talking about peoples' lives, we're talking about locking up people.

ROBINSON Mike, your company is headquartered in Nashville, Tennessee yet you work in Washington. Are you marketing or are you lobbying? Are you working the political levers to get business?

QUINLAN I personally get involved mostly in business development, but I do occasionally do some educating of members of Congress, some lobbying. But, in terms of Eric's points, and I think that Eric's article was very thoughtfully written and all, but I think that the concerns that he has about what might have happened in the nineteenth century in terms of private prisons are not going to be repeated. Government is much smarter today than they were a hundred years ago, and the accountability that they require in terms of private prisons is clearly superior. One of the implications, I think, of Eric's article is that somehow the private prison industry is driving the growth in prisons, the growth in the number of people in prison. Twenty-five years ago there were only about 500,000, not 1.8 million people in prison. That has been driven by politicians, by drug wars, and other...

ROBINSON So do Lance and Eric actually believe that private prisons will somehow increase the number of people behind bars?

A PIECE OF THE ROCK

ROBINSON I asked whether ninety thousand people in private prisons is too high a number. Is 1.8 million people in prisons, full stop, is that too high a number?

QUINLAN Personally, personally, I think it's too high a number.

ROBINSON We put too many people in prison in this country.

QUINLAN I believe that we put too many people in prison...

ROBINSON You agree with that?

CORCORAN I would agree with that.

ROBINSON You agree with that?

SCHLOSSER Absolutely.

ROBINSON Okay. I want to make sure that you guys are not holding that, the notion that we're putting too many people in prison, against the private...

CORCORAN Private corporations aren't driving that, they're certainly capitalizing on it, and I think the potential— what I read from Eric— is that the potential is is that they can become a driving force behind an increased...

SCHLOSSER I'll give you an example [ROBINSON Okay. Go ahead.] of nineteenth century- style corruption in the private prison industry. The third largest private prison company for many years was US Corrections based in Kentucky. US Corrections in Kentucky was found to be using its inmates on work for private business for prison administrators— painting their country club, doing work at their schools, etcetera, etcetera: unpaid inmate labor. The head of US Corrections, the third largest prison company at the time in the United States (it was not very widely reported— this was just a few years ago), was found to have bribed local officials so that the local officials would send him inmates. And the head of the third largest private prison company was sent to a federal prison. Now, US Corrections was bought by CCA last year, and in that transaction US Corrections inmates were shifted to CCA. So I'm not saying that the people, everyone in the private prison industry is corrupt, I'm saying the potential for abuse is enormous, and there really aren't any checks or balances right now.

QUINLAN One of the issues, I think, that Eric is concerned about is the quality of the product that is going to be provided by the private companies. But, one of the key elements in determining quality— not the only element, but a key element— is the standards and accreditation process of the American Correctional Association. Fifty-eight percent of private prisons meet the standards of the American Correctional Association. Eight percent of public prisons make it. Now, it's not because the other ninety-two percent of other public prisons failed, it's that many of them haven't chosen to go through the process.

CORCORAN Has ACA ever rejected anyone for accreditation, ever?

QUINLAN Oh, absolutely, absolutely.

CORCORAN Any of your facilities? Any of your facilities?

QUINLAN Well, any of CCA's facilities?

CORCORAN Any of CCA's facilities, ever.

QUINLAN They have had to go back and clear up some issues and then they were accredited eventually, but...

CORCORAN It's different than the information that was given out last week. I mean, I was at the Minnesota conference and, in essence, what came out was that ACA had never rejected accreditation of one of your facilities. One other thing about ACA is that they are a procedure- based evaluation. It's not based on performance. When you look at private facilities versus public facilities, many public facilities are aging. We deal with overcrowding. We deal with a number of issues that CCA does not deal with. And so I don't find that the ACA accreditation really means much to those who are out there working on the...

ROBINSON Let me try a different kind of accreditation, Wall Street accreditation. Talking about checks and balances and lack of checks and balances. (With this???) publicly traded company in business for profit, you've got very smart, highly-paid analysts at Merrill Lynch, Morgan Stanley, every large trading concern in New York City is watching these guys closely. They screw up, they get hit with litigation, it's going to get hammered in their stock— their stock price is going to get hammered. Isn't that an extra layer of checks and balances? Isn't the commercial examination through which these guys are subjected wonderful?

SCHLOSSER Are you saying that what Wall Street determines to be a stock price is an indication of how inmates are being treated at facilities, or how the public is being served by incarceration? If it's a private prison company there's all kinds of limits on access in terms of what's going on in these prisons. In Ohio, state legislators appeared at the CCA prison in Ohio and were denied entry to it.

ROBINSON But my point is this: an extra layer. There are other people looking at these guys who are not looking at the state-run institutions. There's an extra layer of examination and checks and balances...

SCHLOSSER But what are their criteria? Their criteria are profits.

CORCORAN Their disclosure is built around a contract, and if you don't stipulate exactly what you're looking for in that contract, CCA will pass the cost on or simply avoid giving you the information. And that's been their history...

ROBINSON Lance has given us a lot of reasons for objecting to private prisons, but isn't his main objection really that they use non-union workers?

ON GUARD FOR THE UNION

ROBINSON Lance, this one is for you. Also taken from Eric's article. I quote: "Private prison companies can often build prisons faster and at a lower cost than a state agency, and new prisons tend to be much less expensive to operate. But, most of the savings that private prisons companies offer are derived from the use of non-union workers." I've got to put it to you. Don't you object to these guys because they're goring your ox? You represent a union, and they're going around you, and they're paying people less than you guys get paid. Isn't that really what it comes down to?

CORCORAN We could organize private correctional officers in California within about ninety days.

ROBINSON Would you go with that?

QUINLAN Absolutely.

ROBINSON Would you have any objection to unions?

QUINLAN None at all. Absolutely none.

ROBINSON And that's not a big part of you cost-savings?

QUINLAN Absolutely not.

ROBINSON No?

QUINLAN Absolutely not.

CORCORAN So that argument's out, all-right. We worked for forty years to enhance this profession. You know, the prison guard image, the image of the knuckle-driving mouth- breathing thug, you, I want to go home to my children and tell them what I do for a living, I want to be able to go to my wife and have her tell people what I do for a living, and certainly that image doesn't suit a profession. And so we've worked through enhanced background investigations, longer academies, psyche screening, you name it, CCPOA has been the ones that have been increasing the standards for corrections officers.

ROBINSON CCPOA is your...

CORCORAN California Correctional Peace Officers Association.

ROBINSON Okay, thanks. So why don't you go unionize those guys?

CORCORAN Because it is about this profession. They cannot raise themselves to the level that we have in California.

ROBINSON They don't have your standards?

CORCORAN They will not. They can't afford...

QUINLAN In all due respect, Lance, I disagree with you. I think that the quality of private prisons, particularly the CCA prisons, is equal to and exceeds in most cases state and local prisons around this country.

ROBINSON Are you willing to grant that in a very young industry, you guys are making some mistakes?

QUINLAN Absolutely.

SCHLOSSER The CCA prison in Ohio, in Youngstown, Ohio, was the most dangerous prison in Ohio last year. It was supposed to be a medium security prison. It actually held maximum security prisoners.

ROBINSON Who's fault was that?

QUINLAN (Thank you)

SCHLOSSER That was CCA's fault and DC's fault. (several voices) ...Now, I want to get to the training of the corrections officers.

ROBINSON Just tell me how DC prisoners ended up in a Youngstown, Ohio prison.

SCHLOSSER Because CCA signed a contract with Washington, DC, to take their most dangerous inmates and send them to Ohio. The contract, I might add, was not won through competitive bidding. There was no other bid for the contract. [QUINLAN Yes, there was.] I want to talk to the training of corrections officers, which is key.

ROBINSON Go ahead.

SCHLOSSER The corrections officers are the key to any penal institution. It's who the inmates have contact with on a day-to-day basis. Nobody would think of trying to cut law enforcement costs by cutting the salaries of police officers. Corrections officers are as important if not more important in some ways than police officers— they're dealing with people we know are criminals, many of them. At the CCA prison in Youngstown, Ohio, eighty percent, this is according to a Justice Department report, eighty percent of the corrections officers there have no previous experience in corrections. A majority of the sergeants have no previous experience in corrections. The lieutenant who ran the prison often had three years of experience in corrections. There were corrections officers carrying firearms and riding the perimeter in shotguns who had never fired a weapon. The person in charge of the keys at the institution had no training as a locksmith. The person in charge of the armory, where all the weapons are stored, had no training in firearm maintenance. This is from the Justice Department.

ROBINSON Youngstown. Tell us about Youngstown.

QUINLAN First of all, yes, many of the staff in any new institution are going to be new and are not going to necessarily have lots of experience in corrections. But they all received the training, a hundred and sixty hours of training in CCA, and we meet the training standards of any state that we contract with.

ROBINSON You would contend that even granted the lack of experience, you ran a better prison in Youngstown than the District of Columbia was running back in the District of Columbia.

QUINLAN Unquestionably. But we made mistakes, Peter. Don't get me wrong.

SCHLOSSER Let me tell you what some of the mistakes were. Six inmates escaped, five of them murderers, because there were hundreds of prisoners loose on an exercise yard and no corrections officers in the yard for as long as forty minutes. [QUINLAN That's not true, that's not true...] The alarm didn't work— this is quoting a Justice Department report.

QUINLAN But the report is inaccurate. I'm telling you it's not true.

SCHLOSSER Okay. This is according to the Justice Department. The perimeter fence alarm didn't work, the metal detector for that unit didn't work. They made enormous profits off this prison.

ROBINSON Let me stipulate that you don't want to grant these facts. But let's just assume— let's just grant the facts. You've got a competitive situation. You've got other people who can go in and say, we'll run the...

CORCORAN Let's get into humane services. You've gone back to the British model of transportation. We won't house them here, we'll simply farm them out to Australia where basically they going to...

ROBINSON You think it's a violation of a guys rights to transfer him— the District of Columbia doesn't...

(several voices)

CORCORAN If you were truly interested in what's going on with the inmate, certainly you wouldn't take inmates from Hawaii and place them in Oklahoma, virtually separating them from their family for great periods of time. I mean, prison's an ugly industry, let's just put it like that. Whether it's in California, it's a public system or a private system. It's just never good... (several voices)... And the only time people pay attention is when there's riots, when there's escapes, or when there's allegations of abuse, and there's lawsuits. That's the only time people care. Now, given that that's a reality of it, how do you mitigate those factors and actually come up with a better person coming out of the prison? Well, certainly moving them from Hawaii to Oklahoma is part of the problem.

ROBINSON But given all the problems with our prisons, isn't there some value to having the free market trying to work out some new solutions?

TERMS OF INTERNMENT

ROBINSON In a competitive situation where, it may be a very small market, but there's still at a minimum several hundred people doing the choosing— state governments, county governments, and so forth— and if they have now five, ten, fifteen options from which to choose, you get experiments taking place. People try different approaches. Isn't that healthy?

CORCORAN Look, Peter, CCPO is looking at options beyond incarceration. We recognize you can't build your way out of this problem, whether it's public or private. You're going to have to look at comprehensive drug treatment plans, you're going to have to look at mentoring programs, you're going to have to look beyond just building cells.

ROBINSON What do you want? Do you want the new Governor of California and the Assembly and the Senate of California to pass a law saying no more private prisons in California. Would you like that? Is that what your legislative agenda is?

CORCORAN It depends on how you define as ‘prison.'

ROBINSON Putting guys behind bars for long periods of time. You just don't want that done by private corporations.

CORCORAN They should have no interest in that whatsoever.

QUINLAN The private sector does not have a monopoly on mistakes and problems in criminal justice. It's a very difficult business. The mistakes that happened at Youngstown have been corrected. I invite any one of you to come out with me and tour that facility. You will be immediately impressed with the quality of the product. The other thing I'd like to say is that Lance is absolutely right: quality corrections, the results are really what we should all be after. If we can turn out better people from our institutions than the ones we received, we'll all be better off.

ROBINSON And you think you guys have a better shot at doing that?

QUINLAN I think we do.

ROBINSON I asked you at the beginning whether you liked— whether the five percent of prisoners in private prisons was too high or too low, your view. Now I want to ask you to make a prediction. The year is 2009, it's ten years from today. Will the number of five percent have increased or decreased? The percentage of prisoners in private prisons. It'll be five percent or higher, five percent or lower. Lance?

CORCORAN Unfortunately, I have to say it's going to be higher.

ROBINSON So you see yourself losing— you see your guys losing this political battle?

CORCORAN I think it's a reality. I think one thing we can do though is put an initiative and put them at the same standard as public prisons. The public doesn't want additional prisons, won't pass bonds since 1989, no problem. Let's see how they feel about private prisons, because the reality of it is, whether they're public or private, it's taxpayer money.

ROBINSON Mike, higher or lower?

QUINLAN Higher.

ROBINSON You guys are in a growth business?

QUINLAN Absolutely.

ROBINSON Eric?

SCHLOSSER Definitely lower.

ROBINSON Lower?! You're going to win this one?

SCHLOSSER I think that the complex reorganization that CCA just underwent suggests that the value's in the real estate, and building and owning the prisons and running the prisons is a pain in the neck that subjects you to lawsuits, and that's not where the real money's going to be. Otherwise, I don't think there would be a tax-exempt real estate investment trust.

ROBINSON Eric, Mike, Lance: thank you very much.

SCHLOSSER, QUINLAN, and CORCORAN Thank you Peter.

ROBINSON With incarceration rates in the United States running at record levels, private prisons, whatever their pros and cons, are likely to remain a pretty good business bet. Thank you sir. Checkout time is noon, 2025. I'm Peter Robinson. Thanks for joining us.