This guest blog entry is courtesy of my dear friend, Xuan. I appreciate her efforts of taking a quick break from her dissertation work and making a contribution to the Chatter. I guess all that nagging finally paid off. Cam on, Chau! 🙂
The standard definition of the term “investment”–as it is taught in every principles of economics course–is the firm’s expenditures on machinery, equipments, and human capital. Investment is a prized concept in economics. Microeconomics argues investments are how a firm maintains its competitive edge or gets ahead of the competition. Macroeconomics notes investment is a critical determinant of the wealth of a nation.
John Maynard Keynes showed the total output of a country is a function of four variables: 1) consumption expenditure, 2) investment expenditure, 3) government expenditure, and 4) the difference between imports and exports (also called “net exports”). Keynes even made the case that the slowdown of investment expenditure is what causes a decrease in total output and, thus, puts a country in a recession. Keynesian economics is centered on the belief that government expenditure can–and should–replace investment expenditure in recessionary times. If the firm is not going to buy that fancy piece of machinery or employ workers to maintain or increase production capacity, the government has the obligation to step in.
Alfred S. Eichner, following in Keynes’ footsteps, noted that although investment expenditure is a driving engine of capitalism at the macro level, the manner in which thousands of individual firms carry out its investment activity is quite peculiar. The goal of a firm’s investment is to dominate its market(s). A dominant firm has the power to influence everything from prices to profit margin and from how much to produce to the level of paid wages. In order to gain such a dominating market status, the firm has several strategizing options: 1) engage in technological developments (learn to do things and then learn how to do them better!); 2) buy out one’s competitors (mergers and acquisitions); 3) lobby with governmental entities supporting legislation favorable to the firm’s survivability; and 4) engage in miscellaneous illegal activities to bolster its position against competitors and workers.
The news that the Corrections Corporation of America (CCA) was the key force behind the recent passage of Arizona’s anti-immigration law is not surprising. The CCA was simply carrying out the third strategy option discussed above. The passage of the anti-immigration law ensures CCA would get the Arizona state government’s contracts to build and run new prisons for illegal immigrant women and children. The CCA is now ensured a continued (and increased) stream of revenues as long as the anti-immigration law is enforced.
If we are to assume that the CCA is able to run these prisons at a profitable rate, we should also expect the CCA to continue using its retained earnings to lobby with officials in other states to pass similar anti-immigration laws. The CCA would then get more contracts to build more immigration prisons. As the CCA expands its operations, its powerful grip over the prison building and maintenance market would only be enhanced. The CCA is, and will continue to be, the dominant firm in the prison market.
From the CCA’s perspective, it is simply doing what it must to maintain its competitive edge. But from the societal perspective, what are the costs of the CCA’s business model? The costs are quite simple to quantify. Arizona, via CCA’s lobbying effort, has turned its state into a corporatized slave market. Arizona politicians, prison lobbyists, and the CCA are buying and selling women and children to make a buck. The buying and selling process is not direct, which makes it easier for us to cloud our reasoning into thinking it is about keeping our borders safe and upholding our laws.
The CCA’s lobbying efforts to get an anti-immigration legislation passed in order to get state prison building contracts is no short of the CCA handling money over to the Arizona government and receiving slaves in return. The CCA then resells the slaves back to the state of Arizona at a handsome profit, and Arizona returns the slaves back to their respective countries. If the CCA is lucky, the same illegal immigrants will cross the borders and be captured again just so they can reenter the same prison system. Corporatized slavery is a cycle with no end in sight.
Our examination of the CCA’s business model brings up another question. Do we as a society need firms like the CCA to carry out such investment activities in order for us to not be thrown into a deeper recession? Investment is expenditure, no matter what that investment happens to be. Each investment activity is a contribution to our national outputs. Is the promotion of corporatized slavery necessary for us to keep our economy running? Should people be hired to build prisons and keep watch over illegal immigrant women and children? What would these construction workers and prison guards do without their jobs? Is that these workers’ problem, or CCA’s, or Arizona’s, or, worse, our problem? If it is our problem, what are we going to do about it?