I honestly don't understand the incentive part. Can you spell it out?
If the prison company was also in charge of sentencing people to prisons, I would get it. But as long as they merely implement the sentences the court system decides, what are the perverse incentives?
Private prisons are compensated based on the number of prisoners they house, not on the recidivism rate. Private prison companies then further lobby for harsher sentences.
Not to mention they're legally required to attempt increasing profits (maximizing shareholder value) forever. If the supply of prisoners is fixed, how else can that be done other than creating worse and worse prisons?
If the prison company was also in charge of sentencing people to prisons, I would get it. But as long as they merely implement the sentences the court system decides, what are the perverse incentives?