Can a terror prison spark a boom?

Moreover, unlike factories and other economic development, prisons generate little extra business. They are centralized institutions with their own distant suppliers. “Prisons have had nowhere the positive economic benefits people say they will have,” says Boyce Sherwin, a former director of community development in Malone, N.Y., a town with three prisons.

Before the 1980s, most prisons were built in urban areas. But the 1980s and ’90s saw a prison boom in rural areas, in part because stricter sentencing guidelines spawned a growing population of prisoners. Rural towns welcomed and even competed for prisons. Some struggling areas, like Michigan’s Upper Peninsula, have become centers of the prison industry.

No surge in Rush City

When Minnesota opened a prison in Rush City in 2000, some officials predicted big economic benefits. But it generated fewer jobs for residents and less economic boost than many hoped. “I guess I’ve not seen where it’s made any difference in our city,” says Mayor Nancy Schroeder.

In recent years, the opening of new prisons has ebbed. Budget woes have forced some states to close prisons. But new prisons are still under construction, such as a federal prison in Berlin, N.H.

The White House says studies “confirm the essential point that prison openings tend to raise employment and prosperity in the local community.” Researchers object that their studies confirm no such thing. “There’s nothing in the literature I’ve seen to justify the optimistic predictions the CEA makes,” says Hooks. (Neither the White House nor the CEA responded to requests for comment.)

Decision may await federal budget

Illinois aims to sell the Thomson prison, built in 2001 and virtually empty. The White House’s fiscal 2011 budget plan includes $237 million to buy and renovate the prison. But Republicans oppose moving Guantánamo prisoners to the mainland and may try to block the purchase. President Obama has said he can’t close the facility as soon as he had promised.

Experts on rural development say that prisons are just one example of a number of controversial enterprises, including landfills and power stations, that end up in desperate rural communities. These communities have alternatives, they say.

“The strategies that work build on assets in the community rather than pulling in something it doesn’t have,” says Deborah Tootle, community development professor at the University of Arkansas and president-elect of the National Association of Community Development Extension Professionals. A prison “is going to bring in a few jobs. [But] is it going to benefit the community over time? It’s really a question of scale and time.”

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