Jennifer Gonerman in Mother Jones:
Nearly one in four of all prisoners worldwide is incarcerated in America..... Today, one in nine African American men between the ages of 20 and 34 is locked up. In 1970, our prisons held fewer than 200,000 people; now that number exceeds 1.5 million, and when you add in local jails, it's 2.3 million—1 in 100 American adults.
Good news for the double bottom line social venture prison business and their investors, as investment banker Catherine Austin Fitts explains:
The “pop” is a word I learned on Wall Street to describe the multiple of income at which a stock is valued by the stock market. So if a stock like Cornell Corrections trades at 15 times its income, that means for every $1 million of net income it makes, it's stock goes up $15 million. The company may make $1 million, but its “pop” is $15 million. Folks make money in the stock market from the stock going up. On Wall Street, it's all about “pop.”
Prison stocks also are valued on a “per bed” basis — which is based on the number of beds provided and the profit per bed. “Per bed” is really a euphemism for people who are sentenced to be housed in their prison.
For example, in 1996, when Cornell went public, based on the financial information provided in the offering document provided to investors, its stock was valued at $24,241 per bed. This means that for every contract Cornell got to house one prisoner, at that time, their stock went up in value by an average of $24,261.
Jed, how do we calculate the blended value proposition of for-profit prisons? Is the blended value going up or down?