As a personal code, your view is admirable that all punishment is senseless, or that it is both immoral and ineffective to rely on being unpleasant to one person to deter another, or to persuade by bullying and threats. Karl Menninger (a psychiatrist) argued that the way we (the U.S.) manages prisons is itself a crime. (That was in 1968; prisons have gotten worse.)
It is difficult to conceive scaling up this approach in very large economically, socially, and culturally diverse societies, let alone actually achieving the up-scaling.
One of the most promising interventions I have heard of is a Harlem children project in which program workers intervened in the lives of poor black children, sometimes before they were born, by training mothers to talk and read to their babies -- greatly increasing the volume of positive language the children heard from birth (if possible) or at least in the language-formation years before kindergarten. At the same time the mothers were encouraged to decrease the amount of negative and command language they expressed.
The program was founded on the principle that initial language deficits (formed before age 5 or 6) become permanent deficits, and that the consequent poor school performance led to social marginalization from which it was very difficult for an individual to escape. The Harlem program goes on, but is underfunded, of course.
"Youth diversion programs" are more common later attempts to syphon off potential prison inmates before they offend seriously enough to end up in prison. Again, very underfunded. Restorative justice programs involve community efforts to avoid "punishments" by trying to reconnect the early minor offender with his community. All these programs are small and voluntary.
But when you take the best possible positive view of police and the courts, dealing not with dozens, hundred, or thousands of cases -- but millions, and many of the crimes quite serious, it is difficult to see how your approach can be scaled up. The problem isn't just the badness of many of the offenders. It's the size of the institutions (city/county/state governments, various police forces, courts, prosecution and defense offices and staff, not to mention the probation, prison, and parole systems.
It is particularly difficult to scale up your admirable approach when the economic and social structure of large portions of society are crumbling. People don't just feel "disempowered" and marginalized; they
are disempowered and marginalized--often by design.