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The Digital Skeptic: How the Web Puts Ex-Cons Back Behind Bars

Stocks in this article: CVW GEO

Medina was a former drug dealer, then a guest of first lady Laura Bush at the 2004 State of the Union address, and is widely seen in this community as a role model for inmates transitioning to becoming law-abiding citizens. He says the digital economy has put fresh pressures on worthy, reformed inmates who struggle to find the means to master the education needed to stay competitive.

"Complex high-tech skills are hard to teach, even to prisoners with a lot of time on their hands," Medina said.

And shockingly, what this all means, friends, is that a grim -- but lucrative -- upside lurks around the Drahcir Parsons of the world. The large private prison operators are going to make out like bandits.

Big money behind bars
It's no investing secret that the business of selling into America's love affair with law and order has peaked. Yes, the U.S. is the global leader in incarceration, with more than 2.2 million people behind bars. That's a 500% jump over the past 30 years, according to the Washington, D.C.-based Sentencing Project. But for reasons nobody can exactly explain, jail populations have peaked and private prison operators such as the Corrections Corporation are beginning to feel the pinch as governments cut back prison funding.

"We think this environment where limited funds are being appropriated for new capacity is going to continue here for the near term," is how Damon Hininger, president of Corrections Corporation, summed up the declining market on an investor earnings call last February.

Jails aren't my thing. But clearly everybody involved is missing the larger digital age point. After seeing firsthand the challenges prisoners face -- even smart, trained and motivated ones such as Parson -- Hininger and skeptical prison operator investors have absolutely nothing to fear.

For every Parson who is lucky enough to have a room full of people pulling for him, there are millions more who don't. And considering what a brutal race to the bottom our economy has become, finding paying work after jail will get tougher and tougher for inmates returning to the world.

That means they won't last long out here. Like some Charles Dickens' Fagin 2.0 who gets paid to keep prisoners prisoners, jails will be as good a business as any in the digital economy for a long, long time.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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