I wouldn't necessarily consider it a big conspiracy either. It's just a fundamental fact that in democracy, appearance is far more important than results. As I said in another thread, the guy who comes out and says "I promise to rid my community of dangerous child sex predators" will wallop the guy who says "what we need is focused deliberation to come to a working solution" in the next general election, every single time. No conspiracy. Just good ole human nature.
As for a better solution, a big step towards making a better plan would be to remove the profit margin from the equation. Combining greed with criminal justice is a horrible merger. It fosters a system where punishing people is more important than not punishing them. If running prisons, administering parole/probation, tracking Chester and Mohammad, etc. cost the system money (or broke even, for that matter), then it would become a last resort rather than a primary interest. Fuck, Shawshank Redemption should have taught everybody that much.