We need low cost low security jails for people who commit property crimes. Basically just wall off a few square miles and throw them in there left to their own devices.
Many prisons in central and South America are run like this: the prisoners are thrown into a contained environment without guards otherwise, the prisoners themselves (usually visit a gangs) organize the prison economy and otherwise keep the peace (bar for some occasional riots).
You're suggesting making a fucking ghetto for homeless people? Are you serious?
This thread has confirmed my suspicion that HN cares way more about money and their material interests than any sense of morality or ethics.