Prison money spent annually for keeping inmates in prisons

Costs, even if varying in each economy, is a huge cost burden for most
economies. The money spent annually for keeping inmates in prisons bears a huge
opportunity cost, as the same money could be invested into the infrastructure
of an economy to increase the quality and quantity of Capital, by investments
in educational facilities to increase the quality of Labour as an example.
Annual US Prison Expenditure for the year of 2015 has been estimated to be
$42,883,537,590 (Vera, 2015), which I will use as a reliable estimate due to
the fact that the Department of Justice has revealed that US cost of Prisons
has been at a total of $29.5 billion (J. Stephan, Bureau of Justice Statistics
2004). Also stated in the data is the case that from 1998 to 2001 costs
increased annually but with a decreasing change of rate. It
is safe to assume that these costs have increased significantly since 2015 due
to a constant increase in prison population (G. Berman, Prison Population
Statistics, 2013) (Constant
increase in prison population means constant increases in costs and need for
them working pt.3)

The use of Prison Labour would theoretically be a
possible solution to such high expenditures. This is due to the fact that the
low cost of Prison Labour would enable producers who make use prison labour to
minimize costs in a way that would otherwise not be possible in Developed
countries due to minimum wage rates and costs through standards and
legislations. (talk later about
how developing countries don’t have that and also that working below minimum
wage is debatably acceptable as otherwise workers would not be doing anything) The lower costs to producers benefit producers,
as they have higher profits, as well as a possibility of decreasing prices to
achieve more competitiveness. This would then lead to a gain for domestic
buyers as the lower prices by Suppliers would increase consumer surplus and
enable buyers to make more use of their disposable income. This extra money
earned can then be reinvested into facilities or Improvements in Factors of
Production, which both mean a potential increase in economic growth.         

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Another important effect to notice is an increase in
international competitiveness, which is desirable due to low world prices that
have been partially caused by the “four Asian Tigers” (P. Krugman, The Myth of Asia’s
Miracle, 1994), who have taken over the global market by highly efficient
labour force and the absence of standards and legislation with combination of
very low minimum wage rates.  (difference between Asian Tiger and Bangladesh
is that the Asian tigers “keep” the money in their economy which has led to
their success (growth wise as well as infrastructure wise) The improved competitiveness facilitated in low
prices induced by the use of Prison labour would followingly increase Domestic
Consumption, as well as encourage spending from overseas. Relevancy on the global
market is highly important as a decrease in domestic earnings could have the
effects of negative growth on the economy, leading to a decrease in Gross Domestic

The main Incentive to keep Domestic consumers to buy
domestically is the multiplier effect, which is defined as an additional
increase in Aggregate Demand caused by an increase in consumer spending (T.
Cowen, A. Tabarrok, Modern Principles of Economics, 2010). This means that aggregate
demand increases more than the initial input of currency, as it cycles through
the economy multiple times as sellers decide to spend portions of the earned
money themselves. The multiplier effect is also in motion when foreign
countries buy products from the country, as more money flows into the economy
leading to further increases in aggregate demand and economic growth in the
long run.

Even though
Producers as well as Consumers have the ability to lead to economic growth,
Economic Growth also involves improvements and additions to infrastructure and
common access resources. Both infrastructure and common access resources are
non-rivalry and non-excludable, which has the effect that there are no
voluntary investors into such facilities as there is a benefit to everyone, not
just the investor. This is why the government is responsible for the
infrastructure and most common access resources, through which I conclude that
the government influence is a need to truly achieve economic growth. One of the
benefits gained through prison labour for the government lies within the
increased domestic consumption, as the government gets a percentage of extra
revenue created as sales taxes, which the government can then use to reinvest
into infrastructure to counter the above-mentioned opportunity cost caused by
growing prison population.