Crime may not pay, but prison does. Behind the locked doors and razor wire, a parallel economy thrives. But who’s really cashing in?
Governments worldwide spend hundreds of billions annually to keep more than 11.5 million people behind bars — mostly men. The exact global cost is unclear, but in the United States alone — the world’s biggest jailer — the prison budget is $80.7 billion (€69.1 billion) per year, versus Brazil at around $4 billion. India, with the world’s fourth-largest prison population, spends nearly $1 billion.
Private corporations now profit from incarceration in many countries, from building cells to selling phone calls. Inside, organized crime syndicates run contraband empires and extortion rackets. Inmates, meanwhile, hustle for survival in an underground economy where ramen noodles are currency and labor pays just a few cents per hour.
As well as low rehabilitation rates, governments are also failing to curb another growing crisis — prison overcrowding. Penal Reform International reports that 155 countries struggle with prison overcapacity, with 11 at over double their limit. Facilities in Congo, Cambodia and the Philippines are operating at 300 to 600% occupancy.
Profiting from punishment, privatizing the pain
The private sector has been muscling into prison management since the 1980s, with the US, United Kingdom, Mexico and Brazil increasingly outsourcing operations and services to for-profit firms. Most European, Asian and African countries have so far resisted privatization, with some emphasizing the importance of public accountability.
The US government spends over $3.9 billion per year on private prisons, whose operators earn billions more from others services, including prisoner food, health care and telecommunications. These US prison essentials, known as commissary, are marked up by as much as 600%, while phone calls can cost families up to $16 for just 15 minutes.
While Indian prisons are entirely state-run, Brazil’s pay-per-prisoner scheme is criticized as perverse, as it incentivizes private operators like Umanizzare to maximize inmate numbers rather than rehabilitate, leading to prison overcrowding and violence.
This was seen in multiple prison riots throughout Latin America, including the 2017 riot that killed nearly 60 people at a packed prison in Manaus, the capital of Brazil’s Amazonas state. The facility was costing the government double the national average price per prisoner.
Private companies also build and manage entire prison facilities, supply surveillance tech, run prison labor programs and transport inmates between jail facilities and court. They tend to strip costs right back by understaffing facilities, which reduces inmate services. The results have been mixed.
One of the private sector’s major successes is a prison run by British prison operator Serco in Auckland, New Zealand, which claims that just 13.6% of inmates reoffended within two years of release, local media reported in January. This is lower than the 34% rate for government-run prisons and even surpasses Norway’s recidivism rate of 20%, considered the global standard for prison performance.
“[Private firms] tend to run prisons more efficiently than the state,” Benjamin Lessing, a political science associate professor at the University of Chicago, told DW. “But they’re not a panacea and require thorough oversight.”
While private prisons get a bad rap for profiting from punishment, state-operated prisons struggle with mismanagement, security threats and inefficiency.
One example saw a New York judge threaten to reduce a man’s sentence for tax fraud to home detention if he were to be sent to a federally-run prison in Brooklyn. The judge described the conditions inside as “barbaric” after several killings, stabbings and severe beatings.
Crime networks thrive inside the walls
Beyond bureaucracy, a darker economy thrives behind bars. Organized crime gangs have embedded themselves deep within the prison system. These groups run drug trafficking, extortion and violence both inside and beyond the gates.
Smuggling contraband like drugs, phones and weapons into prisons is a major source of income. Brazil’s PCC gang, whose name translates as First Capital Command, sells drugs at 10–20 times their street value and smartphones for up to $1,500 on the inside, making millions each year.
The gangs sometimes run the prisons better than the state. Lessing said that when the Brazilian government tried to crack down on gangs, it led to higher incarceration rates and the building of more prisons. Ironically, those new prisons also came under gang control.
“In Brazil, the gangs didn’t start as mafia families or drug cartels,” Lessing, who is the author of the upcoming book “Leviathans: How Gangs Govern from Behind Bars,” explained. “They began in response to brutal conditions in prisons. Their real innovation was to impose a baseline social order — outlawing prison rape, theft, and extortion while rationalizing violence.”
Not all gangs are so honorable. In El Salvador, MS-13 runs extortion operations from inside prison, demanding monthly payments from shops, street vendors and taxi drivers, with threats of violence or death for noncompliance.
In the US, many gangs operate on racial lines. The white supremacist Aryan Brotherhood profits from drug trafficking and scams involving prison grocery supplies. These schemes often involve inflating prices, controlling inmate purchases, or laundering money through prisoners’ accounts.
India’s prison underworld, meanwhile, is also shaped by powerful criminal networks. In New Delhi’s Tihar Jail, extortion, contract killings, and drug trafficking are rampant. In western Gujarat, Sabarmati Central Jail has become a hub for transnational criminal activity, including narcotics smuggling and money laundering.
Convicts cash in on confinement
In overcrowded cells, inmates have built an informal marketplace driven by necessity. Everyday items — instant noodles, soap, cigarettes — become currency in a system where survival often hinges on trade.
Across many prison systems, a brutal borrowing rule applies among cons: take one, repay two or sometimes three. Sometimes known as “double bubble,” this system is a form of high-interest credit for the basics in life and contraband, which can quickly trap inmates in cycles of debt and violent retaliation.
Inmates without family money or external funds often turn to dealing drugs to other prisoners just to pay for the essentials. They act as couriers, minders or lookouts in exchange for protection, food, or a cut of the profits. Relatives are sometimes coerced into hiding phones or drugs in body cavities during prison visits or paying off inmate debts.
In Brazil, the modal prisoner is a young, poor, nonwhite male from a favela [slum], affiliated with one of the gangs, who is put in a prison dominated by that gang, Lessing said. While inside, he may not choose to join the gang but will follow their rules and when released, he has contacts who can help him start a drug business or other criminal activity.
“This is a key way that prisoners bring the gang’s power back to the street,” Lessing told DW.
Prison labor also helps cut operational costs, with US inmates paid as little as $1–$4 per day for kitchen work, cleaning and laundry. In Indian jails, inmates can earn as little as $0.10 per day, while Brazilian law ensures inmates receive at least 75% of the minimum wage, which is $10 per day.
US prisoners’ families, meanwhile, spend $2.9 billion a year on groceries, phone calls and other expenses related to their loved ones’ sentences, according to the Prison Policy Initiative. They’re often called to pay court fees, restitution, or fines, too.
Edited by: Uwe Hessler
