On the other hand I always assumed it's due to short-term thinking and incentives misalignment. Incarceration is a quick way to quarantine criminals and fill the need for justice of the offended. A person who ends up in prison (especially the high-security one) is likely to be away for many, many years - at which point what happens when they're released is someone else's problem. Humans are good at dealing with distant consequences in the abstract, but extremely poor at it in practice. So prisons are what they are by default.

Of course there are other issues at play too. For instance, a prison can't be too nice, lest it turns into a free vocational school and people will find committing crimes and getting caught to be an excellent way to get education. Or another example - you can't really make prisoners do useful work for the society (as opposed to just rotting in their cells), because it disrupts the market economy and becomes a powerful force for administrators to threaten their local communities ("do X, or else I unleash my 300+ strong force of unpaid workers and drive you out of market").

The more I think about prisons, the more I see it's a very convoluted issue, and there isn't any obvious, simple solution.