American Gulag – The Shocking Legacy of Slavery: Author article by Lyric Hale

In the next instalment of her regular columntop economic commentator and What’s Next? author Lyric Hale discusses the shocking exploitation of the growing, mostly black, US prison population by private corporations and the government profiting from prison labour. Hale traces this disturbing practice to the slave trade, and an unclosed constitutional loophole that continues to be exploited today.

Author article by Lyric Hughes Hale

The US Civil War, which was fought to abolish slavery, was not really that long ago.  My grandfather told the story of visiting a rest home for Civil War veterans near his town in Missouri.  The Missouri River was a dividing line between North and South, and so when the war was finally over, many families had veterans—and casualties—on both sides.  He remembered watching two old soldiers, one Union, one Rebel, each dressed up in the remnants of their uniforms, having an argument which ended up with one attacking the other with a pair of crutches. Hearing this as a little girl was the first time the Civil War seemed real to me.  It is a vivid reminder of the close links that bind this country to its history of slavery, which still haunts our national conscience.  As I recently discovered, we maintain what can be only be called legalized slavery today—the utilization of prison labour for public and private profit.  Many if not most of these inmates are themselves the descendants of slaves.

In Britain, slavery was abolished in 1833, earlier than in the US.  In spite of its economic lure, it was outlawed at least in part because of the persuasive voices of inspired political leaders and artists.  The painting The Slave Ship, a J.M.W. Turner masterpiece, depicts the famous episode of the British ship the Zong in 1781. 132 African slaves headed for sale in the United States were deliberately thrown overboard and perished mid-sea, due to a lack of drinking water on board.  In his new book, The Zong: A Massacre, the Law and the End of Slavery Professor James Walvin concludes that this event, and the public outcry against it, was the turning point that resulted in the end of the slave trade in Britain.

The US was not so lucky, or perhaps, the entrenched interests were too deep, and so a much bloodier battle that ended 500,000 lives ensued, and it took a further thirty years to abolish slavery.

It is worthwhile to study this history, and to hold its lessons close, because slavery remains in other forms if not by name in the 21st century.  Mauritania still has a slave population that is some 18% of its population, about a half a million people–although it is technically illegal.  The poverty and harshness of the Western Sahara and lack of economic alternatives make it a difficult practice to eradicate.  We might expect this in the Third World, but we have versions of it in the US.  Beyond the plight of the working poor, in the US the practice of involuntary labor continues in our prisons, without much public scrutiny.  This practice has evolved since the Civil War, particularly in the South, for historical reasons.  Former slaves were incarcerated on minor or fabricated charges for extended periods of time so they could work as inmate labourers for the profit of the state and its contractors.

“In the nineteenth century, Texas leased its penitentiary (which survives today as the Huntsville “Walls” unit) to private contractors. For a few dollars per month per convict, the contractors were allowed to sublease their charges to farmers, tanners, and other businessmen. It was not long before the inmates began to appear in poor clothing and without shoes. Worked mercilessly, most convicts died within seven years of their incarceration. Escapes and escape attempts were frequent. Conditions were so horrid that some inmates were driven to suicide while other maimed themselves to get out of work or as a pathetic form of protest.” – John DiIulio, Jr. The Duty to Govern 1990

Eventually, the prisoner-for-lease system became such a scandal that it was outlawed one hundred years ago.  But in the 1980’s, conditions were ripe for reversion.  The 13th Amendment to the US Constitution that abolished slavery contains a loophole that allows the exploitation of prison labor:

Section 1: Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Today, the US prison system delivers profits to both government corporations and private enterprises in several ways: 1) Through the use of inmate labour to produce goods and services in federal and state prisons 2) Through the contracting of this labour to private companies at below-market wages and 3) By privatization of the prisons and detainment centers themselves.  Given these perverse incentives to maintain a high inmate population, is it any wonder that the number of prisoners and the length of their sentences —Americans comprise 5% of the world’s total population but 25% of the world’s prison population—have skyrocketed since privatization began in 1984?

One might ask if this population surge could be due to a sudden increase in violent crime in America. A much smaller percentage of prisoners than one would imagine have histories of violence. Just 3% of those in Federal prisons, and a third of those in state prisons, have been convicted of violent crimes. A majority of those in city and county prisons are merely awaiting trial and cannot make bail. As any policeman will tell you, much criminality would be eliminated if drug laws were changed. Moreover, of the total prison population, it is estimated that 16% are suffering from mental illness, according to Vicky Pelaez in Global Research in Canada. And did I mention, the vast majority are black males?

What is the failure of our society that has led to the forced segregation from society of so many of our citizens, many of whom the descendants of slaves, on this scale?  In 1860, the US had 4 million slaves.  Now, according to Adam Gopnik in the New Yorker (January 30, 2012):

Mass incarceration on a scale almost unexampled in human history is a fundamental fact of our country today-perhaps the fundamental fact, as slavery was the fundamental fact of 1850. In truth, there are more black men in the grip of the criminal-justice system—in prison, on probation, or on parole—than were in slavery then.  Over all, there are now more people under correctional supervision in America—more than six million—than were in the Gulag Archipelago under Stalin at its height.

America has now created its own Gulag and it makes much more than just license plates. Of the 2.3 million prisoners now being held, more than 100,000 work in federal and state prison industry programs.  This doesn’t mean the usual cooking, cleaning and peeling potatoes, but work that produces products for sale—about $2.4 billion dollars annually and has its own tradeshows. UNICOR, the trade name of the government-owned Federal Prison Industries, cites the following products on its website:

The government, particularly the Department of Defense, is the biggest customer for the federal prison labor. Most military clothing, furniture, and helmets are made by Federal inmates. It is very likely that they made the furniture at your local post office. Calling directory assistance? You might well be talking to a felon.  Clearly, UNICOR has expanded beyond clothing and furniture.  Look at just one category, electro-optical assemblies:

Our electro-optical and circuit board assemblies, and electrical connectors are used around the world and have broad applications in missile guidance, tactical combat and emergency communications, radar, and avionic and submarine control systems.

UNICOR/FPI is highly proficient in electrical and fiber optic cable convergence technology, which is used in applications requiring faster transmission of signals over longer distance and with less weight. Our electro-optical cable assemblies are used in avionic and missile controls, submarine navigation, and tactical observation and targeting systems in fighter jets, helicopters, tanks and other armored vehicles.

Our expertise in manufacturing electro-optical assemblies is proven in numerous programs, such as the Bradley eye-safe laser rangefinder and the Patriot missile guidance system.

We are talking guided missile components here! UNICOR had revenues of about $900 million in fiscal 2011, of which 7% went to pay inmates. According to my estimates based on their annual report, this averages $3000 per inmate, at least half of which must be used for fines, victim restitution and family support. Assuming a 40-hour work week, 52 weeks a year (there are no holidays in prison) that would amount to pay of about 75 cents per hour, which “may be spent in the prison commissaries” according to the UNICOR annual report.  This puts the federal prison worker on par with his Chinese counterpart.  No wonder this labor group is attractive to industry: no unions, OHSA, healthcare or retirement funds to fret about.  As UNICOR boasts on its website:  “All the benefits of domestic outsourcing at offshore prices. It’s the best kept secret in outsourcing!” Actually it is even better–although we will not accept imports from Chinese laogai, or prison factories, there is no US law that prevents export of our prison labor products.

Federal prison workers however are the envy of state inmates, some of whom earn nothing for 60 plus-hour weeks.  Texas and Georgia offer no compensation at all. (It is no surprise that these states have highly privatized prison industries as well.) In The Nation, Abe Louise Young writes about the use of Louisiana state prison labor to clean up the toxic waste that resulted from the BP oil spill:

Work release inmates are required to work for up to twelve hours a day, six days a week, sometimes averaging seventy-two hours per week. These are long hours for performing what may arguably be the most toxic job in America. Although the dangers of mixed oil and dispersant exposure are largely unknown, the chemicals in crude oil can damage every system in the body, as well as cell structures and DNA.

Inmates can’t pick and choose their work assignments and they face considerable repercussions for rejecting any job, including loss of earned “good time.” The warden of the Terrebonne Parish Work Release Center in Houma explains: “If they say no to a job, they get that time that was taken off their sentence put right back on, and get sent right back to the lockup they came out of.” This means that work release inmates who would rather protect their health than participate in the non-stop toxic cleanup run the risk of staying in prison longer.

This kind of cooperation is enabled by PIE (Prison Industry Enhancement)  a program run by the Department of Justice, which allows both UNICOR at the Federal level, and state prisons to partner with private enterprise.

It is not just the government prisons that have perverse incentives for maintaining high prison populations.  It is the very business of warehousing human beings which was privatized in the mid-80’s that is to me the most disturbing.  Here is a map of private prisons in Texas created by the website Texas Prison Bid’ness:

It just seems to me that judicial punishment is one of those functions that is uniquely the business of the state, and that somehow it is immoral for anyone to profit from this.  In fact, two big players, CCA and GEO weren’t doing all that well until 9/11.  Since that time, they have also been building immigration detention centers at a very fast pace.  No secret that privatization has therefore had the greatest momentum in the border states, including Vermont.  It is hard to forget the awful “Cash for Kids” debacle in which two judges (now themselves recently sentenced to prison) took kickbacks for sending children to for-profit juvenile detention centers.  Dave Reutter in Prison Legal News quotes Dean Baker, co-director of the Center for Economic and Policy Research:  “Privatization just doesn’t work” he stated.  “It’s a way for politicians to throw business to their friends.”

A compelling economic argument against prison labor is that it competes unfairly with free labor.  Diane Cardwell writes in the New York Times (March 14, 2012) that UNICOR is now getting into production of solar panels and other forms of alternative energy.

 “This is a threat to not just established industries; it’s a threat to emerging industries,” said Representative Bill Huizenga, a Michigan Republican who is the lead sponsor of the proposed overhaul legislation. “If China did this — having their prisoners work at subpar wages in prisons — we would be screaming bloody murder.”

There is now pending legislation to create a wage floor for prison inmates, as well as require basic safety standards.  The discussion is not just about protecting inmates.  In an era of high unemployment, jobs matter. Congressman Walter Jones of North Carolina has said “It is simply wrong for the U.S. government to administer a military procurement policy that favors giving jobs to felons over law-abiding Americans.  That is especially true during these difficult economic times.”  There is also concern about quality control for defense-related production.  Reportedly, 42% of UNICOR’s orders overall were delivered late.

What are the benefits to society of prison labor?  I have read articles that it helps and doesn’t help recidivism.  That there are better ways to prepare inmates for life after jail, such as education, training, and addiction counseling.  What is the overall impact on the economy? According to Jeffrey Kling and Alan Krueger of Princeton University and NBER, 100% utilization of prison inmate labor would result in a rather small economic benefit–.2% of GDP at most. Because this is mostly unskilled labor it could in fact reduce the wages of high school dropouts in the private workforce by 5% –which would increase the overall rate of poverty.  (Note however that people with wages under $13,000 spend 9% of their income on buying lottery tickets.)

Kling and Krueger conclude:

In concert with privatization, we suggest that inmate workers be covered by all relevant labor legislation that applies to private sector firms: including the right to form a union, fair labor standards, and workplace safety regulations.

That is the very minimum that must be done.  We need to do some national soul-searching about all of the reasons we have so many people in jail.  But it is an election year—and felons don’t vote—so the probability is high that nothing will be done. But let’s begin the discussion.  As I finish this article, by weird coincidence, police cars are flashing their lights outside my house.  A young man, driving under the influence of drugs or alcohol, crashed into the gate of our driveway as he was pursued by an unmarked car for speeding.  I saw him as he was led away in handcuffs, in tears.  I hope his parents have a very good lawyer.

What's Next?

What’s Next?

Lyric Hughes Hale is a writer and contributor to a range of publications, including the Financial Times, Los Angeles Times, USA Today, Current History and Institutional Investor.

What’s Next? Unconventional Wisdom on the Future of the World Economy by David Hale and Lyric Hale is available now from Yale University Press.

Click here for more articles from Lyric Hale

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  • June 26, 2012


    It is unfortunate that in the American prison today people are getting incarcerated for petty crimes. The fact that prisons are now operated to benefit business is not only immoral but also serves as a disadvantage to the American society. These prisoners are being used as slaves to produce mass amounts of products and services by which they in return get paid below-market wages. Depending on the department these inmates work in, they usually get paid under a dollar an hour. When we think about a dollar, this is nowhere near the average-market wage for the average American but is only a fraction of the average-market wage.
    Aside from the fact that inmates are paid poorly, another problem that contributes to their under-paying wages is their loss of freedom. As soon as these inmates enter the prison, not only are they striped of their rights, but also the right to their to choose what is best for them once they get inside the prison system.
    It is disheartening to think about our current American prison because many average Americans are unaware about how corrupt our current prison system is. As a law-abiding American it is important to make sure that the system in which we live in is just to serve for the benefit of American citizens and not corporate businesses.

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