The political economy theory differs markedly from labeling theory, which focuses on the attributes of the clients as the determinants of the labeling act. In contrast, the political economy theory emphasizes economic or material factors and their political and legal factors as the determinants of social control. The political economy theory views diversion and deinstitutionalization as myths and sees transinstitutionalization and net widening as the corresponding realities. Transinstitutionalization takes the form of using nonpublic or noncorrectional facilities for the detention of deinstitut1onalized delinquents. Net widening takes the form of using programs and agencies to service juveniles diverted from the juvenile correctional system; for example, the passage of the Juvenile Justice Act of 1974 established financial incentives for States to deinstitutionalize juveniles from public correctional facilities. As a result, juveniles are now incarcerated in private and/or nonpublic correctional facilities, including psychiatric hospitals. AB3121 was passed in California to prohibit the secure detention of status offenders in correctional facilities. California's Proposition 13 dealt further blows to the resources available for public services in general and for group and foster homes for troubled youths in particular. Thus, to understand juvenile delinquency today, an understanding of the realities of transinstitutionalization and profiteering private entrepreneurship is imperative. Eight references are included.