Supply And Demand and The Economics of Prison

Michael Winsett explains how the economics of prison operate through informal systems where inmates trade stamps, commissary goods, and credit to survive inside. [reposted]

The Prison Store Economy

When it comes to the economics of prison, you have to live inside here to really understand it.

For example, inmates use postage stamps as poker chips. At the end of the night, you can keep the stamps or cash them out for other items.

Then there are inmates who run what are known as “inmate stores.”
[EDITOR’S NOTE: The prison commissary is usually only open a few hours a week, so inmates with available funds stock up on commissary goods and sell them to other inmates at a markup during off-hours.]

Say the store man gives you an 80-cent honey bun. The next week, when you order items from commissary, the store man wants the cost of the honey bun back—$0.80—plus half of what it costs, another $0.40. So the store man expects $1.20 in return.

How you pay him back depends on what the store man wants to restock his prison store. For instance, he might want a bag of $1.20 chips instead.

---

“Washing” Prison Money

The prison store man also knows how to “wash his money”—in other words, make it clean.

Here’s how it works.

He buys $100 worth of items from the commissary. Then he sells those items in exchange for postage stamps at his usual rate of time and a half.

Let’s say you want to buy a $0.95 candy bar. The store man might charge you three $0.49 postage stamps for it. That means the store man makes about $0.52 in profit.

After selling $100 worth of commissary goods for about $152 worth of stamps, the store man puts the stamps in an envelope and mails them to his girlfriend, sister, mother, or whoever helps him on the outside. They sell the stamps at face value and send the money back into the prison to the store man’s commissary account.

Now the store man can buy more items and refill his store.

In a year, a store man can make $900 to $1,000 this way.

---

Loans and Debt Inside Prison

But that’s not the whole system.

If an inmate owes a drug debt or a poker debt and cannot pay right away, the store man may come to his rescue—for a small fee.

For example, if an inmate owes $200, the store man may pay the debt using commissary goods. Later, when the inmate receives money, he must pay the store man $300—$200 for the original debt plus $100 interest.

This can save the inmate from getting beaten—or worse—from being stabbed or killed over unpaid debts.

The store man may also loan money and set up an installment plan.

If you owe the store man $300 but only receive $75 per month from your family, he might allow you to pay $25 per month until the full balance is paid.

Sometimes there is more than one store man. One may specialize in candy and sweets, while another sells hygiene items.

---

Don’t miss Michael Winsett’s story: How The Alternatives to Violence Project Changed My Everything

---

The Risks of Running a Store

There is a downside.

I have seen store men taken to solitary confinement for being accused of running a store in prison. What happens to them often depends on how they conducted business and how they treated other inmates.

Usually, if a store man is fair with people and doesn’t pressure inmates too hard to pay their debts, he can survive.

But if he rushes inmates to pay and starts threatening people, sooner or later someone will snitch—and a new store man will take his place.

Don’t miss Michael Winsett’s story: How The Alteratives to Violence Project Changed My Everything 

Michael Winsett is now free, thriving on the outside and working as a peer support counselor helping other inmates. And he loves what he does!
 

The post Supply And Demand and The Economics of Prison first appeared on Prison Writers.