At what cost: the social costs of drug prohibition

Every government policy brings its own set of externalities and unintended consequences. Furthermore, because politics exists at the intersection of competing interests, outcomes can often approach zero-sum, regardless of whether this was the original goal of policymakers or not. Simply put, someone wins while someone loses; there are always costs. In my previous messagewe concluded with a cursory look at some of the social costs of drug prohibition, such as increased violence, property crime, and an increase in overdose deaths. In this post we take a closer look at the (sometimes hidden) costs that the War on Drugs™ entails.

The astonishing growth of the prison-industrial complex

Although America makes up approximately 4.23% of the world’s population, it is responsible for almost a quarter of the world’s prison population. At any given time, 1.9 million individuals are the unwilling guests of federal, state, and local prisons. a per capita rate of 565 per 100,000 inhabitants. (Note: In the wake of COVID, many states have opted to release prisoners early due to health and staffing concerns. This has led to a temporary 16% drop in incarceration rates. By comparison, China, which has four times the population of the United States and is known for its repressive regime, has 1.7 million people locked up in its prison system – a per capita rate of just 119 people per thousand. According to the Federal Ministry of Prisons About 44% of inmates in federal correctional facilities are there for drug offenses. That number drops to roughly 25% for state and local facilities, a portion of the prison population surpassed only by those imprisoned for violent crimes.

By creating an entirely new class of criminals, drug policy generated an ever-increasing need for space to house these prisoners. While Richard Nixon-era drug policy leaned toward treatment rather than incarceration (which is not to say Nixon didn’t want incarceration; he did(at least for certain segments of society), Reagan’s Comprehensive Crime Control Act of 1984 established a mandatory minimum sentence for drug offenders (and civil asset forfeiture, another social cost under discussion). This, of course, caused a rise in the prison population, but it was the Clinton administration’s Violent Crime Control and Law Enforcement Act of 1994 that jump-started the prison construction industry. This law not only mandated a minimum sentence of 25 years for persons convicted of a crime for the third time, it set aside $97 billion for the construction of new prisons. State and local governments took advantage of this funding, and while adding their own funding, 544 correctional facilities were built between 1990 and 2015, an average of one every 10 days.

The straw that sets this noxious drink in motion is the Prison Industry Improvement Certification Program (PIECP). Although the Thirteenth Amendment allowed prisoners to be used as a cheap labor source, this was limited to use by individual states, as it was illegal to transport prisoner-made goods across state lines or use prison labor for private entities. When the PIECP was passed by Congress in 1979, these restrictions on prison labor were removed, introducing perverse incentives into the criminal justice system through the profit motive. As Reagan’s ACT required new space for the influx of drug offenders, companies and political leaders not only began contracting to build and operate new facilities, but officials began negotiating with the private sector for opportunities to generate revenue and profit of prison labor (Chang & Thompkins, 2002). Essentially, prisons went from being a nominally rehabilitative, functionally punitive institution to a means of making a profit. Thus the prison-industrial complex was born.

Much of the literature on this strange paradigm focuses on the rise of private prisons, but while these facilities are problematic, they house only 8% of incarcerated persons. The pressing issue is that the profit motive that exists in private, for-profit prisons also exists in publicly funded state and local institutions. This is reflected in the fact that large institutional investors such as Merrill/BofA Securities purchase prison construction bonds worth more than $2.3 billion annually (Cummings, 2012). They are willing to finance the construction of both private and public prisons because they guarantee generous returns. This ROI is ensured by the low wages paid to inmates, both those employed in facility maintenance and those who work for private industry.

Estimates suggest that there is convict labor involved responsible for more than $2 billion in goods and services, while prisoners make pennies on the dollar; the average wage is between 13 and 52 cents per hour. Additionally, correctional facilities earn additional revenue by charging inmates for items such as room and board, court fees, and necessities such as toiletries. These chargebacks can take up to 80% or more of the inmate’s eager wages, and some even leave their captivity short of cash. Prisoners fortunate enough to work for private employers under the PIECP program are paid higher wages that must be commensurate with prevailing local wages. This affects less than 6% of inmates, and their chargebacks are often even higher.

The irony of this situation is that the PIECP was intended to enhance the rehabilitative function of prison labor by teaching prisoners skills that would be valued in the marketplace upon their release. A confluence of interests, from politicians wanting to be tough on crime during election season, police departments benefiting from better funding and equipment to focus on drug arrests, prisons benefiting directly from contracted labor, and private interests wanting to take advantage of the many opportunities available to them through financing, construction and cheap labor have all conspired to turn the whole thing into a cottage industry with perverse incentives.

In my next post we will continue with the militarization of the police.