One of my offline projects has been a book on private prisons I've been writing with my friend and colleague Donna Selman. I'm pleased to say the book is now out and available: Punishment for Sale: Private Prisons, Big Business and the Incarceration Binge (Rowman and Littlefield, 2010). Those who have been reading the blog, my websites or other books will not be surprised that the book is critical of the impact for-profit, Wall Street traded, multi-billion dollar international prison business have had on justice and public safety.The book is relatively short (240 pages) and cheap (about $25 new).

(more below the image)

At the end are some links to more information, but this is a Box explaining the book. It comes from the forthcoming third edition of Class, Race, Gender & Crime, which I just finished copyediting (that book will be available over the summer). Yes this is either cross-promotion or shameless self-promotion, depending how you look at it. 

Box 10.1 [of Class, Race, Gender & Crime, 3rd ed]

Punishment for Sale: Private Prison, Big Business, and the Incarceration Binge

Chapter 2 [of Class, Race, Gender & Crime, 3rd ed] identified privatization as one of the major trends that would continue to exert an influence on the criminal justice enterprise. Privatization refers to the practice of outsourcing government functions and services to private, for-profit business under a contract with the government. Punishment and incarceration may seem like odd functions to privatize, but private prisons are a multi-billion dollar a year business and the two largest firms – Corrections Corporation of America (CCA) and GEO Group – are multinational businesses that are traded on Wall Street. 

In a recent groundbreaking examination of prison privatization, criminologists Donna Selman and Paul Leighton argue in Punishment for Sale (2010) that understanding the nature of the contemporary criminal justice system requires understanding privatization, including the business model and financial dynamics of these firms. It’s not just a multi-billion dollar business, but CCA has a billion dollar credit line with various powerful Wall Street investment banks. They – and all the shareholders – ensure that the private prison firms are managing the business risk factors that they must disclose in filings with the Securities and Exchange Commission. Risk factors include not getting enough inmates from government to be profitable, sentencing reform (like the repeal of certain mandatory minimum sentences), steps toward the legalization of drugs, and immigration reform.

While these are controversial topics, the debate over justice policy needs to be on the merits of reform – not based on the financial interests of wealthy shareholders and Wall Street. Indeed, research demonstrates that private prison firms have already influenced public policy to their own benefit through campaign donations, and they have rejected a shareholder proposal to fully disclose donations and lobbying money. (They have also voted down proposals to make the performance incentive piece of executive pay include criteria related to the absence of human rights or labor violations.)

Selman and Leighton (2010) argue that privatization was born from two trends. First, the relentless war on crime and war on drugs caused massive prison overcrowding. Extremely costly prison expansion and renovation were the inevitable results of “getting tough,” but it ran into conflict with politicians’ other favorite lines about lower taxes and less government. Second, President Ronald Reagan declared in his first inaugural address that “government is the problem,” and he set the stage for anti-government politicians to privatize a range of services. The historical moment was ripe for several politically well-connected individuals, backed by the same venture capital that facilitated the expansion of Kentucky Fried Chicken, to use private funds to build their own prison and collect money from government to house inmates from overcrowded facilities. 

As briefly noted in this chapter [of Class, Race, Gender & Crime, 3rd ed], the incarceration binge has been costly and ineffective – —and has contributed to social injustice (especially racial). Selman and Leighton (2010), after developing these points more fully, argue that private prisons were born from an oppressive war on crime and the future of their business depends on the continuation of those dynamics. Companies traded on the stock exchange owe a basic duty to shareholders to grow and become more profitable, regardless of the impact on others or on justice. 

Privatization has several important implications for understanding the intersections of class, race, gender, and crime. First, in a variation of The Rich Get Richer and the Poor Get Prison (Reiman and Leighton 2010), with prison privatization the rich whites get richer because the poor minorities go to prison. As noted in chapter 3 [of Class, Race, Gender & Crime, 3rd ed], stock ownership is concentrated in the hand of relatively few wealthy families who are mostly white. As noted in this chapter [of Class, Race, Gender & Crime, 3rd ed], those going to prison are disproportionately minority – and private prisons have a substantial number of contracts to house immigrants (including detained families). Racial fear means business and profits for private prison companies. 

Second, chapter 2 [of Class, Race, Gender & Crime, 3rd ed] noted that private prison firms pay substantially less than their government counterparts for prison staff, a point that generates opposition to privatization from unions. (Median earnings for all correctional officers and jailers were $35,760, but private prisons paid $25,050.) But private prison firms also pay their executives substantially more than the head of a Department of Corrections who manages substantially more inmates. For example, the cash pay (excluding stock awards and options) of the CEO for the GEO Group was almost $3 million in 2007 for having 54,000 beds under supervision. The Director of Corrections for Michigan was paid just over $200,000 that year for having almost 52,000 inmates under supervision and a parole and probation caseload of another 200,000 people (Selman and Leighton 2010).

Paying those at the top substantially more while paying those at the bottom substantially less directly contributes to income and class inequality. This process is exacerbated by additional fees at the top to the Board of Directors, who make $50,000 a year at CCA and $60,000 a year at GEO, plus fees for attending various meetings (including a compensation committee that decides how much the executive gets paid). In comparison, the median household income in 2007 was $50,230, so the pay for the part-time director position of a private prison was more than what half of all U.S. households earned from all their employment responsibilities (Selman and Leighton 2010). Overhead costs for the directors, SEC lawyers, consultants, mergers and acquisitions, “customer acquisition” (advertising and lobbying), shareholder lawsuits, and shareholder relations mean a wide variety of criminal justice workers will have lower wages and less economic security than if they had a government job.
  

Information from Amazon.com

Information from publisher: Rowman and Littlefield

Information on Class, Race, Gender & Crime (the 2nd ed does not contain the box above, but information contained in the link will be updated when the new edition comes out)

More information on private prisons (current "crime pays" section of paulsjusticepage.com. This will be updated and moved <eventually> to a section related to Punishment for Sale.

Posted by paul at 11:41 AM | Permalink/Bookmark | Rich Get Richer, Poor Get Prison

A standard critique of media portrayals of crime includes an over-emphasis on street crime compared to white collar crime. Yes, the law also emphasizes street crime over white collar crime -- the the summary of Ch 2 of The Rich Get Richer and the Poor Get Prison -- but the media goes even further. When was the last time COPS, Law & Order, CSi, etc dealt with a white collar crime? Sometimes rich people end up on the show, but usually for committing a homicide or other street crime, not for corporate acts that harm workers, consumers, the environment and/or communities.

So, along comes the USA series White Collar. Neal, a convicted art forger, joins forces with an FBI agent to solve white collar crimes. Television is now dealing with white collar crime, right? Well, sort of. As I will explain below, the crimes that are portrayed are a narrow set of white collar crimes -- and they are ones that do not challenge abuses of power by corporations or government. I'll provide some examples of "ripped from the headline" events that the show will not touch. Finally, I'll raise the issue that USA's ownership by GE (which owns NBC Universal) might be a factor given GE's habitual offending over the course of decades (no 3 strikes and you're out for the powerful). 

My research, teaching and  TV watching

I like USA's Burn Notice, so the idea of a series about white collar crime caught my attention. Part of it was a professional interest, but I try to avoid rationalizing TV watching as part of my work. Still, I am a co-author of Class, Race, Gender and Crime (going into a 3rd ed); co-author of the ninth edition of The Rich Get Richer and the Poor Get Prison; and I teach a class on white collar crime. I've seen most of the episodes of White Collar, thanks to repeats and not TiVo.

In the premier episode, I noticed a scene where Neal is in prison, sitting on a bunk with  scratch marks in the walls to count the passage of days. The show was trying to establish his motivation for cooperating with the FBI, but I was disappointed when the scene ended with swatting a bare light bulb hanging from cord and the bulb breaks. Please - prisons are designed so there is nothing around for the inmates to use to hurt themselves, each other or the guards. Electric cords are a no-no; there's not just the shock risk, but also a strangulation and suicide risk as well. Glass is a no-no; it can be used by a prisoner to cut himself (suicide risk here as well) and as a weapon. A light bulb, in the possession of someone patient with lots of time on their hands could potentially be turned into an explosive. When exposed to air, the filament gets red hot, so fuel from a lighter (yes, it would be contraband, but available) could be combined with a light bulb into something problematic. (I guess I should say I have also taught a corrections class.)

In spite of my critique above and below, I generally like the show. My critique is really about the politics of white collar crime. More specifically, my critique is that they have created a show about white collar crime that is non-political -- especially in an era where Wall Street just got huge bonuses for fucking up the world's economy. 

White Collar Crime and Power

Too frequently, white collar crime is about employee theft, bank tellers embezzling, and credit card fraud. In each of these cases, the perpetrators, white "white collar" professionals, are victimizing an entity more powerful than themselves (stores, banks, and financial institutions). What's missing from the picture are harms done by the powerful, usually powerful corporations and governments. 

White Collar follows the former pattern and not the latter. Counterfeiting is a crime against the government; the perpetrators may be rich and sophisticated, but still have less resources and power than a government. Art theft or the other variations in the show tend to be personal crimes: one on one crimes, either without a clear power dynamic or one in which an individual is protected from a more powerful group of obvious "bad guys" (organized crime, for example). Absent are episodes where someone with power and prestige who is seen as a respectable person victimizes the less powerful. This is really the essence of white collar crime and the common theme of most definitions.

"Ripped from the headlines" applied to White Collar

"Ripped from the headlines" is part of the advertising for Law and Order, which airs in (endless) re-runs on USA because of the ownership of Law and Order's production company. This gives the show a timeliness and vague "reality" that catches people's curiosity: "Although the stories tend to wander into make-believe, they rely on the lightly disguised depiction of real people and events for their immediacy and sense of authenticity," notes the Washington Post in an article about surviving family feel "blindsided" and violated when crimes appear on the show.

While using people's personal tragedies as fodder for popular TV without contacting them is not a model I would recommend for White Collar, a few "ripped from the headlines" examples might help clarify my critique about the apolitical nature of White Collar. This is a short list pulled from my recent bookmarks...

A Big Car Manufacturer that became became "a little safety-deaf." Yes, Toyota in real life, but the safety deaf quote was from Transportation Secretary LaHood, who noted some problems penetrating the corporate culture. He added that "For now, any car that's on the Web site needs to go back to the dealer because they're not safe."But there are many questions about whether the dealer's fix really solves the problem. To add to the intrigue, maybe a West Wing flare, we see that "Toyota heads to Capitol Hill with team of lobbyists, history of political giving" Can the FBI ensure that justice prevails even though the there's "a million bucks in donations, a million bucks to charities preferred by key members of Congress, a 32-person (and growing) lobbying operation -- what’s a little free speech among friends? I’m sure it’s a coincidence, but Toyota spent $45,000 feting Sen. Jay Rockefeller (D-W.V.), who, oh my gosh, happens to chair one of the relevant transportation committees readying for hearings on the company." It might not be Jack Bauer in 24, but lives are on the line.

A Treasury Secretary misleads Congress about how $700 billion will be spent: then Secretary Paulson said: "During the two weeks that Congress considered the [TARP] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem." For those needing more explanation, a financial blogger explains "So Paulson knew 'by the time the bill was signed' that it wouldn’t be used for its advertised purpose – disposing of toxic assets – and would instead be used to give money directly to the big banks. But he didn’t tell Congress before they voted to approve the TARP legislation." At what point does misleading Congress and the public become a crime? Is it relevant that the biggest beneficiaries of the new and undisclosed plan was Goldman Sachs, where the Treasury Secretary was a former executive?

Added intrigue: The Federal Reserve asks AIG to keep quiet about the huge payments that went to Goldman (even a national security exemption! - but that wouldn't be believable on TV, would it?). Of course there are further issues about the payment of huge bonuses by those institutions receiving taxpayer money through TARP as well as the lobbying they are doing to defeat reform. (Some Way too much of it seems to be legal, but this could still be part of the plot, just as discussions about whether to charge and what to charge are part of the drama of Law & Order. )

Food processor as mass murderer, knowingly ships contaminated food that kills 5 and sickens 500:  The Peanut Corporation of America. Remember those hundreds of potentially contaminated products? The executive who would not eat any of the products when a Congressman offered him some at a hearing? The back story is that on 12 occasions of two years they had lab reports that confirmed salmonella and they shipped products anyway according to a Washington Post article. Investigation is hindered by the fact that companies are not required to report test results to the FDA. The FDA has no power to order a recall, so all they can do is pressure the company into a "voluntary" recall. Again, maybe not Jack Bauer, but real lives, real children died. More than a year later, no criminal charges, even though there's a very good case to be made for them.(There's another possible investigating similar concerns with hamburger.)

Pharmaceutical giant illegally markets drugs: Pfizer agrees to a $2.3 billion settlement over illegally marketing a drug. According to the New York Times, it was "the largest health care fraud settlement and the largest criminal fine of any kind ever."  Reading further, it was "Pfizer’s fourth settlement over illegal marketing activities since 2002." The recidivism seems to be important as "the government charged that executives and sales representatives throughout Pfizer’s ranks planned and executed schemes to illegally market not only Bextra but also Geodon, an antipsychotic; Zyvox, an antibiotic; and Lyrica, which treats nerve pain. While the government said the fine was a record sum, the $2.3 billion fine amounts to less than three weeks of Pfizer’s sales." There's also an issue that this "occurred while Pfizer was in the midst of resolving allegations that it illegally marketed Neurontin, an epilepsy drug for which the company in 2004 paid a $430 million fine and signed a corporate integrity agreement — a company wide promise to behave." (More here and here). Illegal marketing mean higher costs to taxpayers as people on Medicare are prescribed drugs they don't need and/or higher doses of drugs, plus there are all the side effects that people have to deal with for medication they did not need to take.

As a related episode or subplot, the NYT reports that: "Newly unveiled court documents show that ghostwriters paid by a pharmaceutical company played a major role in producing 26 scientific papers backing the use of hormone replacement therapy in women, suggesting that the level of hidden industry influence on medical literature is broader than previously known." (Yes, the companies write articles for medical journals about their drugs and "solicit" pay doctors to put their names on it.)

You get the idea. If not, see some white collar crime reviews on this blog.

Corporate Media

While some people would say the topics are boring and that's why they are not on TV, I'd point out the success of John Travolta's Civil Action (pollution from chemical company causes cancer); Julia Roberts' Erin Brockovitch (same); Al Pacino's The Insider (informant on tobacco company); and Enron: The Smartest Guys in the Room.. If White Collar can create a drama around a stolen piece of art, why not some of the high stakes issues above. 

The problem more likely is corporate ownership of the media. Specifically, USA is owned by NBC universal, which is owned by GE. Here's part of the lowdown, which is in the opening of Chapter 8 of Class, Race, Gender and Crime (the forthcoming 3rd ed; the 2nd ed has a less detailed version). 

Now consider the case of General Electric, which is not considered a habitual criminal offender despite committing diverse crimes over many decades. In the 1950s, GE and several companies agreed in advance on the sealed bids they submitted for heavy electrical equipment. This price-fixing defeated the purpose of competitive bidding, costing taxpayers and consumers as much as a billion dollars. GE was fined $437,000—a tax-deductible business expense—the equivalent of a person earning $175,000 a year getting a $3 ticket. Two executives spent only 30 days in jail, even though one defendant had commented that price-fixing “had become so common and gone for so many years that we lost sight of the fact that it was illegal” (in Hills 1987, 191).

In the 1970s, GE made illegal campaign contributions to Richard Nixon’s presidential campaign. Widespread illegal discrimination against minorities and women at GE resulted in a $32 million settlement. Also during this time, three former GE nuclear engineers—including one who had worked for the company for twenty-three years and managed the nuclear complain department—resigned to draw attention to serious design defects in the plans for the Mark III nuclear reactor because the standard practice was “sell first, test later” (Hills 1987, 170; Glazer and Glazer 1989).

In 1981, GE was convicted of paying a $1.25 million bribe to a Puerto Rican official to obtain a power plant contract. GE has pled guilty to felonies involving illegal procurement of highly classified defense documents, and in 1985, it pled guilty to 108 counts of felony fraud involving defense contracts related to the Minuteman missile. In spite of a new code of ethics, GE was convicted in three more criminal cases over the next few years, plus paying $3.5 million to settle cases involving retaliation against four whistleblowers that helped reveal the defense fraud. (GE subsequently lobbied Congress to weaken the False Claims Act.) In 1988, the government returned another 317 indictments against GE for fraud in a $21 million computer contract.

In 1989, GE’s stock brokerage firm paid a $275,000 civil fine for discriminating against low-income consumers, the largest fine ever under the Equal Credit Opportunity Act. A 1990 jury convicted GE of fraud for cheating on a $254 million contract for battlefield computers, and journalist William Greider reports that the $27.2 million fine included money to “settle government complaints that it had padded bids on two hundred other military and space contracts” (1996, p. 350; see also Clinard 1990; Greider 1994; Pasztor 1995; Simon 1999).

Because of tax changes that GE had lobbied for and the Reagan tax cuts generally, GE paid no taxes between 1981 and 1983 when net profits were $6.5 billion. In fact, in a classic example of corporate welfare, GE received a tax rebate of $283 million during a time of high national deficits even though the company eliminated 50,000 jobs in the United States by closing 73 plants and offices.

Further, “Citizen GE” whose advertising slogan has been—“brings good things to life”—is one of the prime environmental polluters and is identified as responsible for contributing to the damage of 52 active Superfund sites in need of environmental cleanup in this country alone. In 1999, they agreed to a $250 million dollar settlement to clean up the Housatonic River in Massachusetts.

GE is responsible “for one of America's largest Superfund site, the Hudson River, where the company dumped more than a million pounds of toxic wastes including cancer-causing polychlorinated biphenyls over a period of decades, according to the EPA” (Center for Public Integrity 2007). Instead of cleaning up their part of the 197-mile site, they mounted an eight-year challenge to the Superfund law that requires polluters to remedy toxic situations they created. (GE’s corporate environmental counsel during part of this time, Ignacia Moreno, was appointed by President Obama to be Assistant Attorney General for the Environment and Natural Resources Division in the Department of Justice.)

Even though felons usually lose political rights, GE donated almost $18 million to candidates in federal elections between 1989 and 2009 (Center for Responsive politics 2009), and they spent $191 million for lobbying between 1998 and 2009 (Center for Responsive Politics 2009a). In spite of having been convicted of defrauding every branch of the military multiple times, GE is frequently invited to testify before Congress.

GE also has the ability to shape public opinion through its ownership of NBC Universal, which owns NBC television (and A & E, USA, and others), MSNBC and the financial news outlet CNBC. Some call CNBC an “economic infomercial” because there’s a rather obvious but little discussed conflict of interest between owning a financial news outlet, being one of the world’s largest financial operations and receiving government support during the economic crisis.

GE created a number of finance arms to help people and companies buy its products, and those activities account for nearly half of their earnings in the last five years (Gerth and Dennis 2009). Most people know GE “for light bulbs and home appliances, but GE Capital is one of the world's largest and most diverse financial operations, lending money for commercial real estate, aircraft leasing and credit cards for stores such as Wal-Mart. If GE Capital were classified as a banking company, it would be the nation's seventh largest” (ibid). Although GE was not originally eligible for government support through programs enacted to help with the financial crisis, they engaged in lobbying and received $74 billion in loan guarantees that helped the company finance its operations at low cost (ibid).

For 2008, GE was the sixth largest company on the Fortune 500 list. If the corporation’s revenue were compared to the Gross Domestic Product of countries, it would be in the fifty largest economies in the world. With this kind of political, economic, and social power, it is easy to understand why “three strikes and you’re out” does not apply to the “big hitters” like GE.

Gee, I can't imagine why they wouldn't want a show about white collar crime that was "ripped from the headlines" and more importantly spoke truth to power. When you are the power, you shape people's vision of truth. And the the (corporate) truth is that crime isn't about what the rich and powerful do. Nothing to see here - check out the good looking guy dealing with white collar crimes about computer chips...

Listening to:

I want my bailout money

Posted by paul at 07:47 PM | Permalink/Bookmark | Class, Race & Gender

Laws.com just published an article listing what they consider to be the top 50 justice blogs. Consistent with the sentiment of this site and my books, they note that while the U.S. has made some great strides toward equality, we have not reached or goal. (I'd say that we will never reach the goal; it will always be a struggle for more equality.) They suggest that an important part of the battle is increased awareness and thus want to bring attention to justice bloggers.

As the headline of this post notes, PaulsJusticeBlog is on the list (see #4). But I'm posting the link to the article - Fighting for Liberty and Justice for All (11/10/09)- to share the list with others and hope people will browse through it. I found several interesting blogs that I didn't know about: Howard Zehr has a restorative justice blog and I enjoyed the corporate justice blog. Yes, there are some questionable ones that don't seem to me to fit the description, but it is worth browsing. 

Since I am writing about the blog, let me mention that I'm aware of promising more frequent posting that hasn't really happened. There was a bunch of work preparing for the national criminology conference and dealing with flu in the family. I'll be posting my presentation quite soon - I just need to make a few small change to make it suitable for posting on the web.

Posted by paul at 09:24 PM | Permalink/Bookmark |

Most of us have been trapped somewhere and forced to listen to music we don't like, so we have a sense that muzak can be annoying as well as the blaring and thumping of tunes from the car next to us. But music is also used in hostage and standoff situations, and it was used to help coerce detainees at Guantanamo to cooperate in revealing information. There's some info from a Washington Post article (Torture songs spur a protest most vocal) that reports on a Freedom of Information Act (FOIA) request seeking records on how music was used in the interrogation process.

Was the theme to "Sesame Street" really played to torture prisoners held at Guantanamo and other detention camps? What about Don McLean's "American Pie"? Or the Meow Mix jingle? Bruce Springsteen's "Born in the U.S.A."?  A high-profile coalition of artists -- including the members of Pearl Jam, R.E.M. and the Roots -- demanded Thursday that the government release the names of all the songs that were blasted since 2002 at prisoners for hours, even days, on end, to try to coerce cooperation or as a method of punishment.

The article quotes Suzanne Cusick, whom the Post describes as "a music professor at New York University who has studied, lectured about and written extensively on the use of music as torture in the current wars." (As someone who studies genocide and hate crimes, I'm not in a position to say this is odd...). She states that "Sound at a certain level creates sensory overload and breaks down subjectivity and can [bring about] a regression to infantile behavior. Its effectiveness depends on the constancy of the sound, not the qualities of the music." Played at a certain volume, she said, "it simply prevents people from thinking."

It makes sense that the loudness is a key factor. But certainly the type of music can also have an effect. Many of my students drive in a cars with huge huge speakers cranking rap.  So, using rap with them in an interrogation setting would take longer for it to be effective.

"Cusick, the NYU music professor, has interviewed a number of former detainees about their experiences and says the music they most often described hearing was heavy metal, rap and country. Specific songs mentioned include Queen's "We Are the Champions" and "March of the Pigs" by industrial rockers Nine Inch Nails." 

The FOIA request was from the National Security Archive at George Washington University. Having gone through some frustrating FOIAs for information for my private prison book, I know this will take a while a long @#$%*ing time. Among other items, we submitted a FOIA for contracts the federal Bureau of Prisons had with private prisons. The law requires them to acknowledge your request within a certain time period, but there is no limit on how long they can take to produce documents - and you may need to hassle with them over the photocopying cost. Several years later and we're still waiting for the contracts.

The National Security Archive has some more info and a list of links to other stories about this request.  The deeper background is available on this page, which has excerpts of documents that mention the use of music in interrogation. This includes "declassified documents and published reports that refer to the use of 'loud' music to 'create futility' in uncooperative detainees at Guantanamo. A 2004 Defense Department report on abuses at the military base in Cuba, for example, stated that the 'futility technique included the playing of Metallica, Britney Spears and Rap music.' For FOIA geeks (like me), they have the actual FOIA letter they sent to the government.

Posted by paul at 07:50 PM | Permalink/Bookmark | Sex, Drugs, Rock & Roll

It's been a while since I posted here because I have been working hard on some book projects that required my attention and had deadlines. Some authors seem to do well posting bits of their book online, and that's a skill I obviously have not developed. That's also partly because of the time crunch and hassles as multiple books work through the process and come back with questions, permission hassles, length issues, etc.

But here's the rundown:

1. The Rich Get Richer and the Poor Get Prison, 9th ed.

I've been working with Jeff Reiman on this since the 4th edition and this is the first where I'll be a co-author. [Amazon.com info ~ companion website]

2. The Rich Get Richer and the Poor Get Prison: A Reader

This is the first edition of the reader. In the reviews that the publisher commissions before each edition, professors keep wanting more coverage of issues, more depth etc. So, we came up with this companion volume so we could keep the main text relatively true to the original (which has done so well). Selecting articles, writing intro, dealing with permissions hassles, making some cuts to accommodate length - this has been a bit of work, but  I'm happy with how it turned out (at least how the page proofs looked - the book itself will not be available until late October). [Amazon.com info ~ publisher's website]

3. Punishment for Sale: Private prisons, Big Business and the Incarceration Binge

This is co-written with my colleague Donna Selman and the research won EMU's Merlanti Faculty Ethics Research Award this year. The book was delivered to Rowman and Littlefield quite late, but  it is good and a contribution to the waning literature on private prisons. Here's the 150-200 word description we wrote for the Author's Questionnaire:

Punishment for Sale is the definitive modern history of private prisons – businesses that build and/or manage prisons for a profit. Today, these businesses have shares that are traded on the stock exchange, and this volume traces their origin back to the incarceration binge and President Reagan’s embrace of privatization. Based on original research, this volume uses stock offering documents to explain the (hotel-like) business model of private prisons and their place within the prison-industrial complex. It provides an analysis of key issues and problems found in a difficult to obtain sample of contracts executed between governments and private prison companies. And, it examines the efficiency and overhead costs of private prisons by reviewing executive pay, acquisition, mergers and other corporate activity. Punishment for Sale, which won the Merlanti Research Ethics award, provides a balanced telling of the story of private prisons within a theoretically critical framework. Its revelations from “following the money” make it a must-read for anyone interested in understanding the criminal justice system, public policy and the effects a multi-billion dollar industry can have.

[Publisher's info]

4. Class, Race, gender & Crime, 3rd ed

This isn't quite finished yet, but it is a 3rd ed of the book. We're trying to spend a bit of time reorganizing, updating the literature, trimming out of date material and polishing some of the explanations. More to come on this project.

So, going forward, I hope to put up a post or two a week. I'm working on shorter posts more frequently rather than the longer and more detailed ones I've been doing. 

Posted by paul at 01:04 PM | Permalink/Bookmark | Real Life and Research

Both candidates did a lousy job in last night's debate discussing the current financial crisis. From having talked about it here for the last few weeks, I have a modest suggestion on how to talk about it to the American people in a way that may instill confidence.

1. Recognize how important this is - if the financial crisis doesn't get resolved favorably, then it will be impossible to do anything. Health care reform and use of our military will be much harder if we're in a Depression. 

2. You need to make sure that $700 billion is well spent. Priority #1. That means ensuring no conflicts of interest with the people running it (ie financial institutions giving advice on how to spend the govts money and selling their own crap tot he govt or getting paid by clients for advice on selling crap to the govt). Since Americans are now saddled with a Wall Street Incompetence Tax, make sure that this money achieves its goal of stabilizing the financial system at least cost to the taxpayers. 

3. Work on a regulatory system that will ensure this does not happen again. Priority #2. We've been through the S & L, Enron and the other financial frauds, now this. Worse still, we deregulated after the S & Ls, then scaled back the SEC after Enron, Worldcom, Tyco, Global Crossing, Adelphia, etc and etc blew up in some of the largest corporate bankruptcies up to that time. We don't need 'deregulators' who have now changed their tune - and could well change back again when the crisis has passed, thus paving the way for more problems.

We know there will always be business cycles, and financial markets need some room to innovate. But when things go poorly, they shouldn't take down the national or global economy. We need some intelligent regulation that will not be undone by lobbying three or four years down the road. 

It is a big job, but at least pretend you have a clue.

PS - John "my friend" McCain - you have some explaining to do because this quote of yours scares the crap out of me: "Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation."

Posted by paul at 10:35 PM | Permalink/Bookmark | Class, Race & Gender

"Wall St Incompetence Tax", Continued

Last week, the proposed bailout was the big news and the bare bones, 3 page plan for a $700 billion bailout package was being fleshed out. One commentator quoted a Wall St Journal story that Treasury Secretary "Paulson cautioned lawmakers against letting the plan get bogged down in a debate over unnecessary additions." The commentator adds: "'Unnecessary additions' - things like accountability, transparency, making sure that the crisis does not happen again, and making sure that it solves the underlying problem."

The revised plan grew to 110 pages and started to include a few items to strengthen oversight and transparency, and deal with some of the criticisms summarized by this blog last week. The plan was ultimately defeated by the House. As I'm putting together this blog, the Senate is preparing to vote on a very slightly revised plan later tonight. The 'new' plan is exactly like the previous one, except that it also (1) raises the amount of bank deposits that are federally insured, something that helps a little and (2) include tax breaks for businesses, individuals and alternative energy, which really have nothing to do with the problem. The latter are added to attract some votes, even though the tax cuts will enlarge the national debt and could turn some previous supporters away from the new bill.

Some lingering problems: 

- We don't need it

• "any rescue could have been handled by expanding existing programs"
• the bailout complicates matters enormously, because it doesn't address the immediate problems
• it's a "rip-off", "pathetic" and a "disgrace"
• it's not big enough to be effective given the amount of toxic debt floating around (try $5 trillion)
  

- The problem of what the govt should be paying for toxic securities has not been resolved. As noted last week, the plan seemed to be to pay above market price for them:

Market Value. Repeat after me - M A R K E T V A L U E. This is what can and should be paid for liquifying toxic balance sheets. Not a penny more. The mere fact that Mr. Paulson has been fighting against this tooth and nail has only destroyed his credibility as a bright, pragmatic thinker, a leader that can get us out of this mess. Instead, he reads as a pandering ex-Wall Street executive, a man more concerned with preserving the status quo than helping usher the financial markets into a new, more customer-focused and risk-managed phase.

For those who want more explanation, check out the links from last week and see the commentary of fund manager John Hussman. He provides some helpful examples to make the point that "The only way that buying the questionable assets will increase capital on the liability side of the balance sheet is if the Treasury overpays for them."

- 200 economists sign a letter saying it is unfair, ambiguous and desperately short sighted. For those who want more detail, see the new study by the International Monetary Fund that analyzes 124 banking crises. (Economists were also not keep on the GOP alternate bailout proposal, which has been folded into the new senate version.)

- Reform. The summary by Speaker Pelosi emphasizes Reinvest, Reimbuse (taxpayers) and Reform. But the reform part seems linked to CEO pay - a problem that's been mentioned here the last few weeks, but other areas are in need of much more substantial reform. Granted, this is something that may take some more time and shouldn't be done before Congress runs off to re-elect itself, but how do we make sure it doesn't get forgotten?

The problem has been noted here a number of times over the last few weeks as we've discussed the idea of 'normal accidents' - how human decisions and responsibility gets lost when complex systems break down. To keep this issue front and center, consider reading the full column that this is excerpted from: 

We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy, to boot. And we got huge bonuses.

But here's a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence.

The same blog notes that the Securities and Exchange Commission has fewer people working for it than the Smithsonian Institution, the collection of museums in DC. "Indeed, Congress doles out more than five times as much money for corn subsidies ($4.9 billion in 2006, the most recent year for which data are available) as it does for the SEC." There's a $675 Trillion derivatives market that is totally unregulated. The blog concludes: "Gee, how on earth did the 3 million people working in the finance industry ever mange to get away with anything with that type of police enforcement?"

As noted last week, weakening regulations about leverage played an important role in  allowing companies to take on much more additional risk. If you want a better understanding of leverage, check out the interactive feature on leverage from portfolio.com.

Finally, there's some concern that proposals to suspend rules about who firms price securities they own may make the problem worse. The term is 'mark to market' and requires firms to use market prices to value securities they hold. The firms claim that the current market price is not the 'real' price, but reflects distressed and unusual conditions. So they'd like more flexibility to use their own statistical modeling to come up with what they see as the right value.  Obviously, a firm can easily manipulate assumptions on the model to produce very favorable valuations for what it owns, and not really disclose all the assumptions. The 'mark to market' was originally introduced to bring increased transparency to the process. "Suspending mark-to-market accounting, in essence, suspends reality" (link goes to good discussion of the issue). Some are even blaming the requirement for the current problems, which prompted an analyst at JP Morgan to comment: "Blaming fair-value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick."

Other reading: 

Bailout linkfest  ~ Tally of federal Rescues ~ alternative plans ~ bracket breakdown, the Financial version of the March Madness

Special Prosecutor Named in Federal Attorney Firings Case

The Washington Post summarizes the developments in the two year old/long improper dismissal case:

Investigators probing the firing of nine U.S. attorneys concluded that top Justice Department officials "abdicated their responsibility" by failing to supervise subordinates who carried out the botched plan, according to a long-awaited report released today. 

[snip]

The investigation uncovered "significant evidence" that partisan political factors played a role in some of the 2006 dismissals. Particularly "troubling," according to the report, was the sacking of New Mexico U.S. Attorney David C. Iglesias after several Republican elected officials complained about voter fraud and public corruption cases he pursued. That episode raises the possibility that obstruction of justice and wire fraud laws were violated.

Justice Department Inspector General Glenn A. Fine and Office of Professional Responsibility Director H. Marshall Jarrett, who had been investigating the basis for the dismissals for 18 months, also cited "inconsistent, misleading or inaccurate" statements by the department's former leaders.

In the 390-page report, issued this morning, they said Gonzales "bears primary responsibility" for the debacle and asserted that he was "remarkably disengaged" from the process, which stretched on for months. Investigators said that after the mass firings came to light, Gonzales made "misleading" public statements about his involvement, failing to recall his attendance at a critical meeting and documents that landed on his desk.

[snip]

In their strongest conclusions, the Justice Department investigators said that D. Kyle Sampson, the former chief of staff to Gonzales, had committed "misconduct" by making a series of questionable public statements and failing to share information with the White House, lawmakers and his own superiors about the extent of the White House involvement in the firings. 

[snip]

The internal watchdogs asked that the investigation continue under the authority of a prosecutor with the power to compel testimony and production of documents. They said their probe was thwarted in part because they could not interview key witnesses, including former White House officials Karl Rove, Harriet E. Miers and William Kelley. Investigators also pointed out that the White House refused to turn over internal documents related to the dismissal of the prosecutors by citing the "sensitivity" of the issues, saying the move had "hindered" their inquiry. 

The NY Times adds:

An internal Justice Department investigation concluded Monday that political pressure drove the firings of several federal prosecutors in a 2006 purge, but said that the refusal of major players at the White House and the department to cooperate in the year-long inquiry produced significant “gaps” in its understanding of the events.

At the urging of the investigators, who said they did not have enough evidence to justify recommending criminal charges in the case, Attorney General Michael B. Mukasey appointed the Acting United States Attorney in Connecticut, Nora Dannehy, to continue the inquiry and determine whether anyone should be prosecuted.

The 356-page report, prepared by the department’s inspector general and its Office of Professional Responsibility, provides the fullest picture to date of an episode that opened the Bush administration up to charges of politicizing the justice system. The firings of nine federal prosecutors, and the Congressional hearings they generated, ultimately led to the resignation of Attorney General Alberto Gonzales last September.

The investigation, which uncovered White House e-mail messages not previously made public, offered a blistering critique of Mr. Gonzales’s management of the department. It called Mr. Gonzales “remarkably unengaged” in overseeing an unprecedented personnel review, and said that he “abdicated” his administrative responsibilities, leaving those duties to his chief of staff. It said that the process for deciding which prosecutors were fired was “fundamentally flawed.”

[snip]

Mr. Mukasey, in announcing the appointment of an in-house prosecutor to continue the investigation, acknowledged that the process for firing the prosecutors was “haphazard, arbitrary and unprofessional, and that the way in which the Justice Department handled those removals and the resulting public controversy was profoundly lacking.”

One of the most controversial firings is of David Iglesias, who was hassled by Republicans over a case involving corruption charges against a Democrat. A review of his book notes that Iglesias was "talented, Hispanic, evangelical, a military veteran and a loyal Bush supporter... [In his book,] Iglesias claims shocking attempts to "co-opt the Justice Department for political ends" with statements that as early as 2003, U.S. Attorneys were being pressured to purge Democrats from voter rolls wherever possible; Iglesias says he was thrown under the bus after refusing to release sealed details of an ongoing prosecution that would scandalize Democratic contenders in a local 2006 race. Iglesias's text, like his testimony before the Senate Judiciary Committee, implicates a number of big dogs, including Gonzales and Karl Rove, as well as the President."

CIA Top Administrator Pleads Guilty to Fraud

According to the Washington Post ("Ex-CIA Official Pleads Guilty to Fraud, 30 Sept 2008, A2):

The CIA's former top administrator pleaded guilty yesterday to steering agency contracts to a defense contractor and concealing their relationship, making Kyle "Dusty" Foggo the highest-ranking member of a federal intelligence or law enforcement agency to be convicted of a crime, officials said.

Foggo, 53, admitted that he conspired to defraud the government through his relationship with Brent R. Wilkes, a California businessman and close friend. Prosecutors said Wilkes took Foggo and his family on a $30,000 Hawaiian vacation and courted the CIA official with expensive meals throughout the Washington area...

In return, court documents say, Foggo helped Wilkes get lucrative contracts, including one in which the CIA paid 60 percent more than it should have for water a Wilkes-affiliated company supplied to CIA outposts in Afghanistan and Iraq.

Foggo, a longtime logistics officer, was the CIA's executive director from November 2004 until May 2006, holding the agency's third-ranking position and one in which he oversaw the CIA's daily operations and budget. The position, which has since been eliminated, was sometimes referred to as "Mayor of the CIA." Foggo was accused of using his seniority and influence at a prior CIA job in Europe to help Wilkes. It is one of the first cases that has involved the CIA's clandestine operations in Europe and the Middle East.

Although Foggo, a Vienna resident, pleaded guilty to one count of wire fraud in U.S. District Court in Alexandria, prosecutors agreed to dismiss 27 other counts against him and to recommend a sentence of no more than 37 months in prison. Judge James C. Cacheris, after accepting Foggo's plea, took the unusual step of telling Foggo that his attorneys "have done a good job for you in this case." Under federal law, Foggo could receive a prison term of as much as 20 years when he is sentenced Jan. 8.

Violations reported at 94% of Nursing Homes

The NY Times reports that: 

More than 90 percent of nursing homes were cited for violations of federal health and safety standards last year, and for-profit homes were more likely to have problems than other types of nursing homes, federal investigators say in a report issued on Monday.

About 17 percent of nursing homes had deficiencies that caused “actual harm or immediate jeopardy” to patients, said the report, by Daniel R. Levinson, the inspector general of the Department of Health and Human Services. Problems included infected bedsores, medication mix-ups, poor nutrition, and abuse and neglect of patients.

The inspector general said 94 percent of for-profit nursing homes were cited for deficiencies last year, compared with 88 percent of nonprofit homes and 91 percent of government homes.

Full report of the inspector general (pdf)

related:  What Are We Going to Do With Dad? [Geriatrician Jerald Winakur looks at the "vast inland sea of elders" that is building and wonders where the doctors will come from to care for them. Writing as the son of an eighty-six-year-old man with dementia, Winakur also details the nitty-gritty of caring for an increasingly debilitated parent. In both of his roles—loving son and highly skilled professional—he is hard pressed to alter a course that punishes his dad and tears at his family.]

Bottled Water: Commercial Use of Public Good

The Washington Post reports (Bottled Water at Issue in Great Lakes, 29 Sept 2008, A7) about a loophole in the campaign to stop the wholesale export of Great Lakes water:

A provision of the Great Lakes Compact allows water to be diverted from the basin if it is in containers holding less than 5.7 gallons. The question is whether bottling water from the aquifers that feed the lakes, the largest repository of fresh water on Earth, should be seen as ordinary human consumption, commercial production, or export of a treasured natural resource. 

[snip]

opponents of bottled water say soda and beer are different because the water is consumed in making something else, whereas they view Nestle as taking a public good, paying very little for it, and making a profit on it.

They also fear that since the compact officially treats water as a "product," the door could be opened to further commercialization and sale. It was such fears that in 1998 launched the process that led to the compact, after the tiny company Nova Group obtained a permit from the Ontario government -- later withdrawn -- to ship up to 158 million gallons of Great Lakes water per year to Asia.

33 Pastors Flout Tax Law With Political Sermons

Churches, like many other organizations, receive tax emptions so long as they do not endorse candidates. I think this makes sense because if tax exempy organizations can endorse candidates, then people will set up nonprofits for the purpose of politics and undercut all our campaign finance laws. So I'd see this as white collar crime, although the pastors and religious groups see this as a govt crime - denying them free speech. (They can still say what they want; they just don't get a tax break.)

From the Washington Post: 

Johnson and 32 other pastors across the country set out Sunday to break the rules, hoping to generate a legal battle that will prompt federal courts to throw out a 54-year-old ban on political endorsements by tax-exempt houses of worship. The ministers contend they have a constitutional right to advise their worshipers how to vote.

[snip]

Each campaign season brings allegations that a member of the clergy has crossed a line set out in a 1954 amendment to the tax code that says nonprofit, tax-exempt entities may not "participate in, or intervene in . . . any political campaign on behalf of any candidate for public office." 

This time, the church action is concerted. Yet while the ministers say the rules stifle religious expression, their opponents contend that the tax laws are essential to protect the separation of church and state. They say political speech should not be supported by a tax break for the churches or the worshipers who are contributing to a political cause.

In an open letter Saturday, a United Church of Christ minister, the Rev. Eric Williams, warned that many members of the clergy are "exchanging their historic religious authority for a fleeting promise of political power," to the detriment of their churches.

"The role of the church -- of congregation, synagogue, temple and mosque -- and of its religious leaders is to stand apart from government, to prophetically speak truth to power," Williams wrote, "and to encourage a national dialogue that transcends the divisiveness of electoral politics and preserves for every citizen our 'first liberty.' "

[snip]

"I have no objections to clergy taking off their robes and walking out the door of their church, synagogue or mosque and immersing themselves in political campaigns," said Rabbi Jack Moline of Agudas Achim Congregation in Alexandria, chairman of the Interfaith Alliance board. "But a sanctuary should not be a place of political agitation on behalf of a candidate. On behalf of issues, yes. Of candidates, no." 

"Pirates" ??

I'll admit I don't know enough to say who is on the right end of this story, but present it as an example of we should be careful about definitions of crime and criminals. The reports are of "Somali priates" hijacking a ship full of tanks an arms, which would seem to be white collar crime.  A later story claimed the pirates had no idea what the ship was carrying when they seized it. According to an interview,

He said that so far, in the eyes of the world, the pirates had been misunderstood. “We don’t consider ourselves sea bandits,” he said. “We consider sea bandits those who illegally fish in our seas and dump waste in our seas and carry weapons in our seas. We are simply patrolling our seas. Think of us like a coast guard.”

The piracy industry started about 10 to 15 years ago, Somali officials said, as a response to illegal fishing. Somalia’s central government imploded in 1991, casting the country into chaos. With no patrols along the shoreline, Somalia’s tuna-rich waters were soon plundered by commercial fishing fleets from around the world. Somali fishermen armed themselves and turned into vigilantes by confronting illegal fishing boats and demanding that they pay a tax.

“From there, they got greedy,” said Mohamed Osman Aden, a Somali diplomat in Kenya. “They starting attacking everyone.” By the early 2000s, many of the fishermen had traded in their nets for machine guns and were hijacking any vessel they could catch: sailboat, oil tanker, United Nations-chartered food ship.

“It’s true that the pirates started to defend the fishing business,” Mr. Mohamed said. “And illegal fishing is a real problem for us. But this does not justify these boys to now act like guardians. They are criminals. The world must help us crack down on them.”

related: profile of Henry Okah (global guerrilas):  Henry, energized by the grinding poverty he saw when he visited his family's ancestral village in the Delta, sought to reverse this flow: away from the capital and the oil companies and into the hands of the people of the Delta. However, in order to do this, Henry had to innovate with warfare.

Posted by paul at 11:13 AM | Permalink/Bookmark | Rich Get Richer, Poor Get Prison