You have to start wondering what kind of accountants our government has when prisoners receive more of our tax dollars than our college students. For many states, it costs 2 or 3 times more to keep a criminal in jail than to put your kid through college. The worst part to me is we have no choice buy to pay taxes to keep criminals in jail, but we have to put up the tuition for our children out of our own pockets in addition to the taxes. When I see injustice (no pun intended…sort of) of this kind, especially with my money, I’m annoyed but I also look to get back some of that tax money through stock investments: Corrections Corp. of America (CXW).

I personally don’t know how to stop this boom of violence nor what government action can be taken to deal with this problem. The trend is definitely a huge increase in the inmates in our prisons and a overcrowding of our prisons. This is where Corrections Corp. of America comes in. They own, operate, and manage a private chain of prisons. Corrections Corp. is especially in demand now that state governments are looking to such private companies like Corrections Corp. than for the state itself to operate prisons.

“Federal prisons are operating at more than 130% of capacity, and two dozen state prison systems are operating at 100% capacity or higher, according to government statistics cited by the company. At latest count, there were about 2.2 million men and women in prison, the Justice Department says.”
~Corrections Corp. Finds Success in Stir, The Wall Street Journal

Just recently on October 10th, this story appeared in the SacBee on the main page:

” Gov. Arnold Schwarzenegger declared a prison overcrowding emergency Wednesday in California, paving the way for inmate transfers to out-of-state institutions within a month.”

So, two main points to consider if you think Corrections Corp is a good investment (and I’m in no way telling you to or not to invest in Corrections Corp.):

• Do you think there’ll be more criminals (and need prisons to house them)?
• Will the government continue this trend of outsourcing complex management work such as Operating Prisons or Airport Security to private companies?

The first seems to me to be a no brainer. The second, while more uncertain, seems to be the way our government is geared towards right now. Like with airport security, private firms seem to do a better job than government slackers because private firms have to answer to their investors as well as compete for the government contract. Then again, there aren’t many companies to compete with Corrections Corp. when Corrections Corp. operates more than 60 state and federal detention centers in 19 states.

This article is meant to suggest one of many possible ways to get some of your tax dollars back, as well as stir some thoughts about the condition of our society. Again, I have to emphasize that I am not a professional investment advisor and you must consult your own advisor if you want to invest in Corrections Corp. I will not be responsible for any gains or loss if you do invest in Corrections Corp.

other resources:

Corrections Corp Website - CorrectionsCorp.com
The Real Cost of Prisons Blog - news tidbits on correctional facilities
Corrections Corp Investor profile

**Disclosure: I do not own stocks of Corrections Corp. of America (CXW) as of this posting**

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This entry was posted on Monday, October 9th, 2006 at 5:57 pm and is filed under Gov't & Utilities, Non-Stocks, Society & Culture, Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.