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There is a sort of a good-news story has been getting, imho, entirely too little attention.  It appears that several Venture Capital firms have crunched the numbers and determined that the incarceration industry is no longer a "growth investment" in the USA.  Last week, Scopia Capital, DSM, and Amica Mutual Insurance sold off their interests in CCA and GEO, which between them control 75% of the "private prison marketplace".

The $600,000,000 in prison stock sold off by the VC firms is, really, not going to pose that big a hardship, as GEO and CCA generally rake in around $3 b-b-b-billion a year between them.  However, I still see this as a good sign.  I'll tell you why, under the infinite orange thingy.

The claims of the Venture Capitalists here, of course, are that they do this out of a pure sense of goodness and decency.  In a statement to, DSM President Hugh Welsh stated that the divestment was made "In accordance with the principles of the UN Global Compact, with respect to the protection of internationally proclaimed human rights," and "divestment was the right thing to do for our clients, shareholders, and the country as a whole. DSM is committed to good corporate citizenship and operating in a way that contributes to a better world.”  Well, a better world is all fine & well, but in the same statement, Welsh also admitted that "Investment in private prisons and support for the industry is financially unsound,"  and where shareholders are involved, the last part of the statement overrides all other alleged "reasons" - they're just window-dressing.

So, one must wonder why, all of a sudden, the VC's look at the prison industry and say "sorry, we're done with you."  My own suspicion is that in a nation in which several states appear to be moving in the direction of marijauna legalization, they're expecting to see a slowdown in the growth of our prison population.  And, as I see it, flattening that growth curve has GOTTA be a good thing for the nation, considering that we currently have 5% of the globe's population, and 25% of it's prisoners!

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Comment Preferences

  •  Tip Jar (19+ / 0-)

    OF COURSE the New Right is wrong - but that doesn't make WRONG the new RIGHT!

    by mstaggerlee on Tue Apr 29, 2014 at 09:14:36 AM PDT

  •  It used to be that economists held services (1+ / 0-)
    Recommended by:

    in lower regard than the production of goods. In part that was  because so many services were delivered by females, who were generally perceived as being worth less and so their contribution to the economic pie was also less valuable.

    In point of fact, since quality products tend to produce a saturated market over time, unless quality is reduced or innovation becomes superficial, high quality services have a much greater demand and staying power over time. Of course, economists have traditionally not given much consideration to what happens over time. Their calculations are always based on a point or moment in time.

    Anyway, given the demise of the production of goods  and the increasing parity of service, investors were tempted to change their perception and invest in services that were/are guaranteed and long lasting -- what I call human husbandry. Moreover, human husbandry looked to be particularly promising because the "recipients" of care are not voluntary participants in the market and not capable of expressing dissatisfaction by just walking away (I'm not just thinking of prisoners. There's also the aged infirm and juveniles ready to be exploited on someone else's dime). A captive market/population seemed ideal until those who were paying for something they didn't want called a halt.

    The problem, of course, is the tradition of generating guaranteed profits for no effort. Why hoarders of currency should be automatically given more is a question just beginning to be asked and not yet answered.

    by hannah on Tue Apr 29, 2014 at 09:47:00 AM PDT

  •  and just where were their principles (2+ / 0-)
    Recommended by:
    blueoasis, wilderness voice

    when they created this industry?

    Yes, good news - but I don't buy their humanitarian conversion.

  •  Basic reason? (0+ / 0-)

    Market saturation.

    "Come to Sochi, visit the gay clubs and play with the bears" - NOT a Russian advertising slogan.

    by Lib Dem FoP on Tue Apr 29, 2014 at 10:26:00 AM PDT

    •  Saturation? (0+ / 0-)

      In a country where one can STILL be arrested for "walking/driving while black/latino/gay/female" in several states?  I don't think so.  The market's as big as those who are willing to exploit it WANT it to be.  I don't think the Koch Bros. would balk at imprisoning EVERYONE whose income is below a certain threshold - I mean they MUST be stealing SOMETHING to get by on that pittance, right?

      OF COURSE the New Right is wrong - but that doesn't make WRONG the new RIGHT!

      by mstaggerlee on Wed Apr 30, 2014 at 11:10:34 AM PDT

      [ Parent ]

  •  The investment firms mention in first section are (3+ / 0-)

    not venture capital firms.  Better to describe them as institutional investors.  

    Keep in mind that when these firms sold their shares someone else bought them.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Tue Apr 29, 2014 at 10:26:12 AM PDT

    •  and bought them at prices (0+ / 0-)

      that do not reflect market negativity on these names

      •  I have absolutely no information ... (0+ / 0-)

        ... with regard to whether these shares were sold at a profit, or if the investors took a voluntary haircut, to avoid having their heads chopped off later on.  If YOU have such info, wv, please inform us.

        OF COURSE the New Right is wrong - but that doesn't make WRONG the new RIGHT!

        by mstaggerlee on Wed Apr 30, 2014 at 11:17:26 AM PDT

        [ Parent ]

    •  By definition, there MUST be ... (0+ / 0-)

      ... a buyer and a seller for every transaction conducted.  Sometimes, in these situations, the company buys it's own shares back.  I don't claim to know that that's the case here, but can you guarantee that it isn't?

      OF COURSE the New Right is wrong - but that doesn't make WRONG the new RIGHT!

      by mstaggerlee on Wed Apr 30, 2014 at 11:13:46 AM PDT

      [ Parent ]

      •  Easy to check. Check Company Cash Flow Statement (1+ / 0-)
        Recommended by:
        wilderness voice

        For example for Corrections Corp of America see

        Look at the line "Sale Purchase of Stock," when this is positive, the  company sold more stock than it purchased in the time period (which also occurs when employees exercise stock options), when it is negative the company purchased more shares than it sold.

        A the above link, you can see the company has been selling more shares than buying.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Wed Apr 30, 2014 at 11:31:04 AM PDT

        [ Parent ]

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