Their argument is pure economical -- "If you tone down the War on Drugs then we will lose profits". Nothing to hide there plain and simple.
Or that case in PA when the local judge was funneling kids to the local prison/"treatment" center.
There is of course concrete evidence to the contrary, as experiments in Scandinavian countries show. Treat prisoners with respect, give them a dignified place of living so they can think about what they did, and you'll find that actually both improves their mental condition and makes them very well suited to rejoin society.
"Ohio's deal requires the state to maintain a 90% occupancy rate, but Janes said that provision remains in effect for 18 months — not 20 years — before it can be renegotiated. As part of the deal, Ohio pays the company a monthly fee, totaling $3.8 million per year." [1]
Another big problem with private prisons and juvenile centers is that judges get greased to send kids to specific centers. [2]
[1] http://usatoday30.usatoday.com/news/nation/story/2012-03-01/...