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Gates Foundation: In support of divesting from G4S

The year 1984 may not have seen perpetual global war between three superstates as it did in the novel of the same name, but 1984 was the year that the first prison was transferred to private operation. Since then, the private prison industry has grown massively, fueled by the violent crime epidemic of the ’80s, the “War on Drugs” and public policy changes, like legislatively-mandated long minimum sentences for all sorts of crimes. As a result of these trends, the United States now has the dubious honor of the highest incarceration rate in the world: 0.74 percent of Americans are in the prison population, 2.3 million people in all.

Some of the players in this burgeoning private prison industry have grown massive: the Corrections Corporation of America employed approximately 16,750 in 2011, with $2.6 billion in assets and $1.7 billion in revenue. Today, private facilities house 8 percent of all state and federal prisons, and the industry sees strong growth.

Private prisons have attracted a great deal of controversy and criticism. The cost savings touted by private sector advocates have failed to materialize through our country’s experiment with private prison operation: Private detention centers have generally cost as much to operate as conventional state-run prisons, even though private prisons tend to incarcerate healthier, lower maintenance inmates. Meanwhile, journalists and prisoner advocates alike have uncovered a litany of cases of neglect and understaffed facilities leading to poor inmate conditions: For instance, the Corrections Corporation of America’s Idaho Correctional Center recorded over three times as many inmate-on-inmate assaults as did the equally-large but state-run Idaho State Correctional Institution. Worse, in the “kids for cash” scandal, two judges in Luzerne County, Pennsylvania were investigated and indicted for accepting bribes from a private juvenile detention operator in However, private prisons are not simply equally inefficient and somewhat less safe analogues of their state-run counterparts. As I’ve studied the issue, I now believe that private prison corporations represent a tangible and dangerous threat to democracy and liberty everywhere they operate.

Why is this the case?

Private prison corporations, like other publicly-owned corporations, are generally expected to continually grow in order to uphold their fiduciary duty to their shareholders. For private prison operators, this means both taking charge of state-held inmates as well as working to increase America’s sky-high incarceration rate. In a pluralist policymaking system such as ours, this duty creates a tremendous hazard.

The private prison industry, a large, moneyed interest that represents tens of thousands of jobs, has a strong financial incentive to increase the frequency and length of prison sentences and to oppose criminal sentencing reforms. In other words, these private prison operators profit tremendously by advocating and petitioning for policy that curtails individual citizen’s liberty. The Correctional Corporation of America acknowledges the threat of criminal justice reform to its bottom line in its 2012 Securities and Exchange Commission filing: “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 criminal laws.” This is incredibly perilous.

This critique is not limited to private prisons: Other industries and corporations that tend to profit from unethical public policy are equally dangerous. For instance, Academi (née Blackwater) and other private military companies generate a great amount of business when the United States creates overseas war zones. Blackwater itself earned more than $1b in contracts during the Bush Administration until being banned from Iraq in 2009. These enterprises thus have the financial incentive to petition for belligerent foreign policy, even when conflict escalation is not in the interests of the American public or the world. The Los Angeles Times has described a revolving door connecting industry lobbyists and advocacy of conflict-related policies.

Thus, I support the Stanford campaign calling for the Bill & Melinda Gates Foundation to divest from its $172 million investment in G4S, the world’s largest security company and a large presence in the private prison sector. While Gates has sold some shares in G4S, the Foundation has not disclosed whether it still retains some stake in the company. If the Foundation wishes to meet its philanthropic mission of ending poverty, it should invest its tremendous assets in a way that does not pose a threat to the lives and liberty of all people of the world.


Peter Johnston ’14

Contact Peter Johnston at [email protected]

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