how prison systems make money

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how prison systems make money

In: Economics

Government pays the prison operator to keep evildoers safely behind bars. There are also other fees that they collect from friends and family of the prisoners, but that’s small in comparison.

It’s the same way any private industry works. Some body pays a fee for a service, the company then delivers this service for that fee. If they want to make a profit, they spend less money providing the service than they receive for doing it.

So the government pays a company to keep its prisoners behind bars. The company does this, but it costs them less to do so than they are paid by the government.

Prisons have one commodity, which is storage. Tax payers fund these prisons to store humans that have committed crimes. For this service, those that run the prisons take a profit. To increase profits, you need to maximize the amount of persons per storage unit as a restaurant would dollar per square foot. It’s economies of scale which is a fancy term for “the more people we hold per area, the cheaper it is for us. Thus, more profit.” To ensure an indefinite business model, you would lobby Goverment (your sole income pipeline) to continue supply. That means tying the hands of judges with mandatory sentences and marketing “tough on crime” campaigns. The services they provide are regulated and subject to civil court, but it’s made difficult by conflicting oversight.

Then, you have a demand that is permanent and without geographical competition so long as you increase and/or maintain your supply of inventory.

Adding to all the other good points, many prisons (mostly in America that i know of) allow the prisoners to do work like farming or fabrication. They are incentivized to do this because its that or sit in your cell doing nothing, they are always “paid” for their labour (in America at least) but its pennies a day and the profit the prison makes off of the products grown/produced is much higher than the “wages” paid.