I don't know about other states, but I am pretty sure that is not true in California. For instance, they make license plates at Old Folsom and furniture at San Quentin, but I think it is only for state agencies.
“I don’t know about other states, but I am pretty sure that is not true in California.”
They make wiring harnesses for the F-16 at the Lom Poc facility, competing against private industry.
They make signs for the Federal government, competing against private industry.
State and federal prisons are not to bad but the ton of private prisons popping up are a definite threat to private industry.