If you start locking people up with careless disregard for whether or not they are guilty, you get all the economic cost of the prison system but lose the clarity of the signal. The message becomes "hey, you're probably going to prison at some point anyway. Might as well grab what you can while you are still free to enjoy it".

I've heard (anecdotally, not with good evidence) that this is precisely the attitude that many poor urban young black men already have (actually with ‘go to prison’ changed to ‘go to prison or get killed’). Thus one has every reason to join a gang for the immediate services that it provides, future be damned.