CCA, LeBron & The Zorg Economy

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The Associated Press has a pretty depressing read about the impending closure of a Corrections Corporation of America prison in Wheelwright, Kentucky, a poor rural town in the Appalachian hills of eastern Kentucky, that is deeply troubling in what it reveals about America's Rube Goldberg economy.

Per the AP, CCA's Otter Creek Correctional Facility is expected to shutter its doors in the coming months as a result of Kentucky's understandable decision to forgo its $21 million contract with the Nashville-based prison company, in the wake of a 2009 sex scandal in which Otter Creek corrections employees were accused of trading privileges for sex with female inmates. The story goes on to state that the main rationale for the closure is part of a budget streamlining plan and — in a move that's actually kind of surprising — a shift away from high-volume incarceration for drug offenders and other non-violent criminals.

As a result, Wheelwright officials are fearful of the hole that Otter Creek's closure will cleave in the local economy once the town's main industry (i.e., incarcerating human beings for the purpose of lining shareholders' pockets) packs up and leaves.

Two years ago, Cleveland faced a similar situation as people freaked out over the departure of LeBron James from the city's eponymous Cavaliers NBA franchise.

Excuse the labored analogy, but bear with us for a moment.

Estimates of James' economic generating prowess vary. But for the sake of argument, analysts believed that a man whose job was to put a thing through a thing netted downtown Cleveland businesses $48 million, created $72 million in the sale of James jerseys, and that a full season of James-led home games created $150 million for the city each year. Without James, Cleveland was left to manufacture its only other viable export: crippling depression.

It was a crystalline moment when the media took notice that a basketball player could hold an entire municipality's economic future hostage. Unfortunately, that newfound perspective has yet to be applied to any other dubious business sector.

In this fashion, your friendly neighborhood for-profit prison company is able to capitalize on the nonexistent economy of Wheelwright (located in Floyd County, which boasts a 10.4 percent unemployment rate as of February, 2012) and virtually indenture them to the company's interests. If Otter Creek closes, Wheelwright will have to rely on its only other viable export: coal.

Wait, strike that — it was coal:

Elk Horn Coal Company founded the city in 1916 about 150 miles southeast of Lexington near the Kentucky-Virginia border, and named it for the company's then-president, Jere H. Wheelwright.

As coal production slowed, the area's economy went with it. Businesses closed or struggled to stay open.

The prison brought nearly 200 jobs to one of the poorest regions in the South when it opened in 1981. CCA paid employees $8.25 an hour — low pay by prison standards but welcome cash for the area.

The phrase "welcome cash" doesn't do enough to convey the desperation in a lot of impoverished communities across America, but it's a nice attempt. With the erosion of a manufacturing base and the general decline of educational attainment relative to income, the current generation of lower- and middle-class Americans are effectively bred as cattle for service sector jobs. (See also "The Academies of Nashville"). But without enough service jobs to go around, illicit economic activity fills the employment gap — like, say, meth production, in order for folks to make ends meet. Thankfully for Wheelwright, CCA is there to employ the otherwise unemployable in service to the U.S. government's War on Drugs, which has been the primary driver for private prison expansion and rising incarceration rates for close to 40 years.

Numerous industries have risen to prominence as a result of this abjectly failed decades-long policy, and in the process companies like CCA have been able to LeBron their way into cash-starved towns across the nation, coupling Americans' fortunes with their own. With entire economies dependent on for-profit prisons, ending the drug war (or, for that matter, easing immigration restrictions as well) is antithetical to the bottom line for both shareholders and Wheelwrights across the country. And it all comes down to money.

From Reason (bold emphasis Pith's):

Nowhere is the private prison industry’s reliance on the drug war more apparent than in CCA’s 2010 report to shareholders. “The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by our criminal laws,” reads the report CCA filed with the Securities Exchange Commission.

“For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them. Legislation has been proposed in numerous jurisdictions that could lower minimum sentences for some non-violent crimes and make more inmates eligible for early release based on good behavior. Also, sentencing alternatives under consideration could put some offenders on probation with electronic monitoring who would otherwise be incarcerated. Similarly, reductions in crime rates or resources dedicated to prevent and enforce crime could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.”

According to a report from the Justice Policy Institute, lobbyists for the private prison industry have pushed “three strikes” and “truth-in-sentencing” laws across the country. Both types of laws adversely affect drug users.

And that, in a nutshell, is why the Drug War will keep going. Similarly, financial reform would entail breaking up of large banks and the prosecution of white-collar criminals; true health care reform would require a single-payer system and put thousands of HMO's out of business; investing in clean energies would result in savings to customers and potentially save the planet, albeit at the expense of the fossil fuel industry.

So for the hapless denizens of Wheelwright, Kentucky, LeBron can never go to South Beach. If he did, it would violate the Zorg Principle. And you don't want to violate the Zorg Principle, do you?

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