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Investors in private prison companies are seeing significant promise in the potential return of Donald Trump to the presidency, expecting a resurgence in their industry. During his campaign, Trump emphasized a strict law-and-order approach, often exaggerating crime rates and portraying American cities as chaotic war zones. His campaign also strongly focused on aggressive immigration policies, highlighted by displays of "Mass Deportation Now!" signs at the Republican National Convention. While the exact implementation of these policies remains uncertain, Trump's campaign press secretary has indicated that mass deportation efforts would commence on the first day of his administration.

Although Trump won't assume office until January, signals from the financial markets suggest that investors believe he will follow through on his tough immigration promises. Notably, the GEO Group, a private prison corporation with substantial contracts with US Immigration and Customs Enforcement (ICE), witnessed a dramatic 38 percent rise in its stock price shortly after Trump was declared the winner of the presidential race. This stock surge suggests that the markets anticipate significant growth for the private prison sector under a Trump administration.

Historically, the GEO Group has strategically positioned itself to benefit from Trump's policies. During his previous term, the company ramped up its lobbying efforts, only to scale back when President Joe Biden announced the phasing out of the Department of Justice's contracts with private prisons. Additionally, the GEO Group made substantial contributions to Trump’s inauguration in 2017 and even hosted events at his properties. In the current campaign cycle, the company has further demonstrated its support by maxing out contributions to Trump's campaign and donating $500,000 to a pro-Trump super PAC.

The company's enthusiasm for a Trump presidency is understandable, given that its business model heavily relies on government contracts. The anticipated mass deportation policy under Trump would likely result in increased arrests and detentions of migrants, consequently boosting revenue for private detention facilities contracted by ICE. In a recent earnings call, GEO Group executives conveyed optimism that Trump’s policies could significantly enhance their financial performance.

While Trump has promoted his bipartisan criminal justice reform bill, enacted in 2018, the market’s response to his potential return indicates that private prison operators like the GEO Group expect substantial benefits. This expectation is concerning, as studies and reports, including a 2016 Department of Justice analysis, have shown that private, for-profit prisons tend to have worse conditions compared to federal facilities. The situation was deemed so critical that the Obama administration had decided to phase out contracts with private prisons, a policy that Trump quickly reversed when he first took office.

Therefore, the betting by investors and the private prison industry on a lucrative second Trump term reflects their confidence in the profitability of policies that could lead to increased incarceration rates. This prediction underscores the potential impact of Trump’s return to the White House on various facets of American society, especially for individuals caught in the criminal justice and immigration systems.