One of the main functions the state serves in practice is to forcibly transfer wealth to politically connected interest groups. Prisons serve that function today, and they have served it historically. In The Enterprise of Law, economist Bruce Benson documents the rise of state controlled law enforcement in England. Stateless customary tort law had previously prevailed, with communities facilitating restitution based justice, but gradually the king and his cronies took control in order to extract wealth through fines and other modes of punitive “justice.” The rise of prisons as a method of punishment happened somewhat late in this process, but it too served a wealth transfer function, Benson explains:
“Houses of correction” were first established under Elizabeth to punish and reform able-bodied poor who refused to work. A “widespread concern for the habits and behavior of the poor” is often cited as the reason for the poor laws regarding vagrancy and the establishment of facilities to “reform” the idle poor by confining them and forcing them to work at hard labor. But Chambliss reported that “there is little question but that these statutes were designed for one express purpose: to force laborers (whether personally free or unfree) to accept employment at a low wage in order to insure the landowner an adequate supply of labor at a price he could afford to pay.” Such laws clearly reflected the transfer function of government.
In this case, prisons were used as institutions of violent coercion meant to establish work discipline, enforce the work ethic, drive down wages, and thus transfer wealth from poor and working people to landowners.
Prisons served a similar function in the American South after the 13th Amendment was passed. The 13th Amendment prohibits slavery and involuntary servitude, but it makes an exception for those convicted of a crime. This provided a loophole that Southern states quickly implemented in order to preserve slavery. They passed laws known as the Black Codes that criminalized a litany of harmless behaviors specifically for black individuals. Then they imprisoned blacks in large numbers and leased them to businesses and governments to perform slave labor, in what was known as the convict lease system. This was yet another use of prisons and the criminal law as a wealth transfer, this time from former slaves to the state and elite economic interests.
Prisons are still used for the profits of entrenched interest groups today. Sometimes that means transferring wealth from taxpayers to for-profit prison operators like Corrections Corporation of America, GEO Group, and the Management and Training Corporation. Sometimes it means price gouging prisoners and their families through your state granted monopoly on phone calls to prisoners, as Global Tel*Link does. Medical contractors like Corizon profit by providing inadequate medical care after being granted a monopoly in a prison. The agribusiness industry protects their profits by sending activists to prison for calling attention to abusive conditions in their facilities, through ag-gag laws and the Animal Enterprise Terrorism Act.
But it’s not just for-profit firms that extract wealth from prisoners and the public through the prison industrial complex. Prison guards at “public” prisons are just as much of a concentrated and selfish special interest group. The California prison guards union has pushed prison expansion and draconian “tough on crime” policies in order to ensure their members’ job security. Democrats Dick Durbin and Cheri Bustos praised federal funding for the maximum security Thomson Correctional Center in Illinois on the grounds that it would create jobs. They essentially treat prisons as a make work program for their constituents.
These are just a few of the ways prisons operate as statist wealth transfers to politically connected groups. Like all such transfers, they distort the market, create unseen opportunity costs, and encourage further rent seeking by privileged interests. But prisons are a particularly brutal institution to use for wealth extraction. The costs of prisons are not merely economic. Prisons rob people of their liberty, subject them to rape, bake them to death, scald their skin off, and institutionalize psychological torture. Prisons should be understood as another form of what Bastiat called legal plunder, and a particularly brutal one at that.
