Will the fiscal collapse that has laid bare gross inequalities in the US economic system lead to meaningful reforms toward a more just society? One answer is suggested by the bursting of what might be called the "other housing bubble,'' for these two years have also brought to crisis the three-decade-long frenzy of mass imprisonment. If there was a bailout for bankers, can there be one for inmates?
It is commonly observed now that, beginning about 1981, during the Reagan administration, the wealth of a tiny percentage of top-tier earners sky-rocketed, while the wages of the vast majority of Americans went flat. A rapid escalation in the illusory value of homeownership soon followed. But an unseen boom began then, too -- in American rates of incarceration, the housing bubble in prisons. A recent issue of Daedalus, the journal of the American Academy of Arts and Sciences, lays it out. In 1975, there were fewer than 400,000 people locked up in the United States. By 2000, that had grown to 2 million, and by this year to nearly 2.5 million. As the social scientist Glenn C. Loury points out, with 5 percent of the world's population, the United States imprisons 25 percent of all humans behind bars. This effectively created a vibrant shadow economy: American spending on the criminal justice system went from $33 billion in 1980 to $216 billion in 2010 -- an increase of 660 percent. Criminal justice is the third largest employer in the country.
But while prisons boomed, something else was happening -- a trade-off. As sociologist Loic Wacquant says, the government was simultaneously slashing funds for public housing. In the 1990s, as federal corrections budgets increased by $19 billion, money for housing was cut by $17 billion, "effectively making the construction of prisons the nation's main housing program for the poor.'' State budgets took their cues from Washington in a new but unspoken national consensus: poverty itself was criminalized. Although "law and order'' was taken to be a Republican mantra, this phenomenon was fully bipartisan, as Wacquant shows, with the most ferocious growth in the incarceration of poor people occurring in the Clinton years. "Welfare as we know it'' was replaced by punishment. States went prison-crazy.
But the current fiscal crisis has blown a hole through all that razor-wire. State budgets suddenly cannot afford prison systems, which universally choke off funds for education, transportation, and infrastructure. Some states, like California, consider simply releasing prisoners because jail time in mega-prisons costs too much. And, equally suddenly, the whole system has become morally dubious as well. While a famously over-exuberant economy was built on the lies of bankers tied to an artificially inflated housing sector, the prison boom depended on racist and class-biased "criminology'' that was, in fact, steadily debunked by penal experts. Just as irrational assumptions of "risk assessment'' prompted mortgage brokers to understate the risks of home ownership, they led prosecutors, in a parallel noted by Berkeley law professor Jonathan Simon, to grossly overstate the risks to society of huge numbers of defendants. The housing bubble, Simon shows, devastated neighborhoods by littering them with abandoned properties. The prison bubble devastated neighborhoods by depriving them of fathers and husbands.
The American double-binge has come to an end. In Simon's image, the era of the "big house'' is over, whether the McMansion in the suburbs or the mega-prison in a field. Here's the question now: Can the war on the poor be returned to the war on poverty? This is not simply opening gates and letting criminals go free, although the harsh fact must be faced that many convicted of non-violent, mainly drug offenses, never belonged behind bars in the first place. But transferring government over-investment in incarceration to re-investment in education and public housing is the only real correction to the massive "corrections'' mistake we made. Re-inflating "America's punishment bubble'' makes no more sense than trying to re-inflate the housing bubble.
We must all regret the illusions we embraced, and that have been so painfully shattered, but, as Simon argues, "We must also recognize the opportunities that the present disasters have created for reinvigorating our economy and democracy.''