Scott Forsyth, BridgeTower Media Newswires
If you have been following the stock market since the election of Donald Trump, you may have noticed the price of two stocks, CoreCivic and GEO Group, zoom — 75% and 54%, respectively. Who are they?
CoreCivic identifies itself as “a diversified government solutions company.” GEO is less circumspect. It boasts it is a “global leader in evidence-based rehabilitation.” In fact, both companies are in the business of managing, for a profit, correctional facilities at the local, state, and federal level. You will recognize CoreCivic better by its former name — Corrections Corporation of America.
Why the zoom in stock price? Because the president-elect wants to privatize many government operations. In particular, he has stated that “private prisons” “seem to work a lot better” than government management of prisons. If he implements this view, he will be reversing the very recent policy of the Obama administration.
On Aug. 18, 2016, the Department of Justice surprised many by directing the Federal Bureau of Prisons, which is part of DOJ, to phase out its contracts with private prison companies.
Private prisons “compare poorly” to federal-operated facilities, the Department reported. “They simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and … they do not maintain the same level of safety and security.” Other government groups and nonprofits have reached the same conclusions about the quality of management within private prisons and their cost savings, or lack thereof.
CoreCivic derives 9% of its revenue from contracts with the Bureau of Prisons and GEO derives 15%. The DOJ report caused the stock of CoreCivic and GEO Group to crater, reaching 2016 lows.
Then in December, what should have been the second shoe fell on the private prison industry. The Homeland Security Advisory Council recommended the secretary of the Department of Homeland Security decrease using private, for-profit prisons to detain immigrants. The Council heard evidence that privately operated detention facilities are generally inferior to federally run facilities, in conditions of confinement and accountability.
It so happens the number of immigrant detainees has shot up in the past year from 30,000 to 45,000; 73% of the detainees are held in privately operated facilities.
To the companies, the revenue from DHS contracts is greater than the contracts with the Bureau of Prisons, 18% in the case of GEO and a whopping 28% in the case of CoreCivic. The loss of just some of the contracts would be devastating.
There are community-based alternatives to the detention of immigrants. DHS should provide bond hearings for those locked up six months and not impose unaffordable bonds. Persons seeking asylum should not be detained at all.
Alternatives will reduce the detainee population and save taxpayer dollars that now flow into the coffers of the private prison companies.
Unfortunately, the president-elect has promised to round up and deport two to three million immigrants in the first years of his office. Who will be one of the beneficiaries of the roundup? The private for-profit prison companies. As noted by the Council, “(f)iscal considerations, combined with the need for realistic capacity to handle sudden increases in detention, indicate that DHS’s use of private for-profit detention will continue.”
Sadly, CoreCivic and GEO may be your growth stocks of 2017 and 2018. The market does not care they profit from the mass imprisonment of human beings.
—————
Scott Forsyth is a partner in Forsyth & Forsyth and serves as counsel to the local chapter of the ACLU, but the views expressed herein are his own. He may be contacted at (585) 262-3400 or scott@forsythlawfirm.com.
