Friday, March 10, 2006

workin' for cca

corrections corporation of america bills itself as prison privatization at its best. would you invest in an incarceration company? should your university?

the yale daily news reports that their graduate employees and students organization is calling for the university to divest from cca. you might recall campus divestment protests over holdings in south africa and other nations. for example, all companies doing business in sudan were recently dropped from yale's portfolio. although cca lobbies to increase prison sentences, however, the university argues that cca's work does not constitute the sort of "grave social injury" that would trigger divestment.

i haven't invested in private prisons. i suppose that i might if i believed that they were incarcerating more effectively or more humanely than the state. yale student daniel pozen makes the case that, relative to nonprofit and public management, private for-profit prisons underperform on recidivism. to date, i don't think we have a definitive recidivism study on this topic. still, i don't see much evidence here for greater effectiveness.

the second question to ask is whether you or your university is actually making any money on cca. probably not. as an investment, cca has been losing ground to broad indexes such as the s&p500 for the past five years.

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