Would legalization disrupt the economics of the Prison Industrial Complex and its pool of slave laborers?...
By Ernest A. Canning on 4/18/2012, 7:05am PT  

Guest Editorial Series by Ernest A. Canning

This is the second of our three-part series advancing the hypothesis that one must turn to economics to make sense of the so-called 'War on Drugs' and the U.S. government's seemingly irrational obsession with shutting down something as innocuous as medicinal marijuana dispensaries.

PART 1 examined both historical and recent links between the CIA and the illicit drug trade. It explored the extent to which the so-called 'War on Drugs' has been used as cover for the CIA's covert import of narcotics, both into the U.S. and other nations, in order to fund the mischief the Agency engages in on behalf of U.S. Empire. It postulated that the government’s opposition to controlled legalization, taxation and medical, educational and psychological assistance in avoiding substance abuse is the product of an illicit supplier shutting down the competition.

Here, we will examine the profitability of the Prison Industrial Complex in the U.S. and the extent to which the world's largest prison population provides a ready source of slave labor for some of the world's largest corporations…

Domestic costs of 'War on Drugs'

In "America's War on Drugs: Misguided efforts that waste resources and sacrifice civil liberties" Mike Kroll attributes President Richard Nixon's declaration of a ‘war on drugs’ to the growing counterculture movement in the 1960s spawned by opposition to the war in Vietnam. This was followed by the Controlled Substance Act of 1970, which, as Kroll describes, "greatly increased Federal funding of law enforcement against drugs. Both the effort and funding [were] ratcheted up again during the Reagan administration."

Kroll reports:

According to figures from the Office of National Drug Control Policy and the National Center on Addiction and Substance Abuse at Columbia University the annual financial cost of the Drug War tops $50 billion with $30 billion of that spent by state and local governments. At an estimated 2.3 million inmates America leads the world in its rate of incarceration and over half of those inmates are serving time for drug-related offenses.

Although the correlation between the 1970 passage of the Controlled Substances Act and the exponential growth in the U.S. prison population is depicted in the graph at right, the surprising feature, as reflected in a discussion at Alternet about a study by researcher Jon Gettman, Ph.D., is the estimated $43 billion annual cost in controlling the least dangerous of the "controlled substances" --- marijuana. The $43 billion is broken down, according to the study, as "$10.7 billion in direct law enforcement costs, and $31.1 billion in lost tax revenues." And that may be an underestimate, at least on the law enforcement side, since Gettman made his calculations prior to the FBI's release of its statistics for 2009.

Although law enforcement effectuated 858,408 arrests on marijuana charges in 2009 --- or one American every 37 seconds --- marijuana use increased by 8% over the previous year.

Gettman estimates that illicit marijuana sales generate $112 billion annually, which helps to explain why Mexican drug cartels have engaged in a deadly war both amongst one another and with the Mexican government. 28,000 lives have been lost in those wars since 2006 and have led to a proposal by Secretary of State Hillary Clinton to spend an even greater proportion of our already depleted National Treasury to escalate the 'War on Drugs' in Mexico, as patterned on our multi-billion dollar military aid program in Columbia. President Obama echoed that approach at the April 14, 2012 Summit of the Americas when, as reported by Amy Goodman, he "ruled out legalization" and pledged, instead, to spend "more than $130 million in aid for increasing security and pursuing narco-traffickers."

What Clinton and Obama failed to mention is that our aid to Columbia, ostensibly to counter narcotics and terrorism, has funded Columbian death squads, who, according to Phillip Alston, the UN Special Rapporteur on Extrajudicial Executions, often murder innocents "for soldiers' personal benefit or profit."

Prison Industrial Complex as an alternative to outsourcing

The statistics are compelling.

As observed by Vicky Pelaez of Global Research:

[T]he United States [aka the "Land of the Free"] has locked up more people than any other country: a half million more than China, which has a population five times greater than the U.S. Statistics reveal that the United States holds 25% of the world's prison population, but only 5% of the world's people.

As revealed by the film, American Drug War: The Last White Hope (see video clip below), as well as Pelaez' account, the size of the U.S. prison population, which is disproportionately comprised of African-Americans and Hispanics, is the product of two perverse economic incentives --- (1) a privatized prison industry whose financial success is dependent upon greater numbers of prisoners serving lengthier sentences, and (2) the availability of a slave labor pool to corporate America.

Pelaez reports:

At least 37 states have legalized the contracting of prison labor by private corporations that mount their operations inside state prisons. The list of such companies contains the cream of U.S. corporate society: IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom's, Revlon, Macy's, Pierre Cardin, Target Stores...

Pelaez adds that between 1980 and 1994 profits from prison labor soared "from $392 million to $1.31 billion" and that, while some inmates receive minimum wage, "in privately-run prisons, they receive as little as 17 cents per hour."

Pelaez's article, in quoting Kevin Mannix, the former chairman of the Oregon GOP, underscores how this form of slave labor has furnished an attractive alternative to outsourcing. "Mannix," Pelaez reported, "recently urged Nike to cut its production in Indonesia and bring it to his state, telling the shoe manufacturer, 'there won't be any transportation costs; we're offering you competitive prison labor [here].'" --- Something to bear in mind the next time you hear a Republican crowing about "jobs creation."

While the number of state inmates, more than 2 million, far exceeds the 125,000 federal inmates, 97% of whom are sentenced for non-violent crimes, the supply of those federal inmates is assured by lengthy mandatory sentences for narcotics possession, according to Pelaez. Some, like actor/comedian Tommy Chong, served time not for either the possession or sale of narcotics but because he was entrapped by former Attorney General John Ashcroft’s "Operation Pipe Dreams" when Chong's son shipped a glass pipe to a county that prohibits them. (See video below).

The same U.S. government whose CIA has been responsible for turning Afghanistan into the world's leading supplier of heroin and marijuana, spent $12 million to go after glass pipes (bongs).

In supporting an accusation leveled by a Progressive Labor Party study that the U.S. has imitated "Nazi Germany with respect to forced slave labor," Pelaez writes:

[T]he federal prison industry produces 100% of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98% of the entire market for equipment assembly services; 93% of paints and paintbrushes; 92% of stove assembly; 46% of body armor; 36% of home appliances; 30% of headphones/microphones/speakers; and 21% of office furniture.

Sounds like the Prison Industrial Complex services the Military Industrial Complex. Synergy!

In short, legalization poses a direct threat corporate America's bottom line. End the 'War on Drugs' and you deplete the available pool of prison slave labor, as well as the profitability of private prisons.

PART 1 of this series ended by asking if the efforts of the DOJ and DEA to shut down medical marijuana cultivation in California reflect an effort by "an illicit supplier [to shut] down the competition?"

In PART 3 of this series, our final report, we'll address our government's continuing resistance to domestic and foreign efforts to break free of the phony 'War on Drugs' and the organized crime wave that drug prohibition has fostered. | UPDATE: PART 3 is now here...

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A video clip from the film American Drug War: The Last White Hope follows...

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Ernest A. Canning has been an active member of the California state bar since 1977. Mr. Canning has received both undergraduate and graduate degrees in political science as well as a juris doctor. He is also a Vietnam vet (4th Infantry, Central Highlands 1968). Follow him on Twitter: @Cann4ing.

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