Wall Street Journal Predicts Prison Boom

We know that the unprecendented building of private prisons has exploded in the last few years and with new immigration laws coming into play it's only going to get worse. State's are shying away from looking at smarter alternatives that would work, as they tiptoe around the issues of addiction, poverty and the lack of decent education. It seems as though it's easier to look away then deal with the problems thoughtfully and head on. The private prison system are just the carpetbaggers of this century and we act as though they are welcome to handle our social ills.

The prison business looks ready to stage a breakout.

Tougher mandatory sentences were already straining the nation's jails. Now, the Department of Homeland Security's Border Initiative and its detention of undocumented immigrants has further burdened the system. Federal prisons already have 33% more inmates than they were designed to house and state prisons are similarly overcrowded.

The upshot? A severe shortage of prison space -- and a robust outlook for the three biggest private jailers.

A Need to Outsource

The vast majority of prisons are still owned and operated by federal or state governments; less than 8% of prisons are outsourced to private operators. But the private market -- dominated by Corrections Corp. of America, Geo Group and Cornell -- is expected to grow substantially over the next five years.

A February report from the Pew Charitable Trusts, a nonprofit research foundation, forecasts a 13% increase in the inmate population by 2011 -- in line with past growth rates, but further compounding the overcapacity problem. That amounts to as much as $27.5 billion in new prison construction and operation.

That kind of burden leaves states and the federal government with little choice but to outsource incarceration to private companies.

Corrections, Geo and Cornell are "far and away the biggest beneficiaries of that trend," says Patrick Swindle, an analyst with boutique investment bank Avondale Partners in Nashville, Tenn.

h/t to Grits for Breakfast

Wall Street Journal