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Old_Gold comments on Is altruistic deception really necessary? Social activism and the free market - Less Wrong
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Some people aren't intelligent enough/don't have high enough time preferences to function in modern society. Thus you either need to have them under the control of a master, or you wind up having to put them on the public dole and institutionalize the many of them anyway.
Why should we have a moral expectation that people have to "function in modern society" or else be enslaved/institutionalized? Our adaptive environment is small forager tribes, not "modern society".
Well, in case you haven't noticed aren't in small forager tribes right now.
You're right, I left out a few alternatives. We could also deport them to a haunter-gatherer society, let them go around engaging in tribal-style raids (although that tends to interfere with the functioning of modern society for those who can function in it), or let them starve to death.