Even better might be spending directly on ex-cons to better integrate them back into society (education, training, etc), instead of spending copious amounts on detention, security, punishment. The resulting decrease in recidivism probability is likely well worth it in most cases.
Also programs for locating at-risk for crime individuals and making sure they have better alternatives, to lower crime rate in first place.
The main problem is I'm quite skeptical that you could consider most criminals as "rational"/well informed of their possibilities and consequences of choices. Therefore increasing punishment probably doesn't change significantly their behavior, only might worsen the outcome once they leave detention in a negatively-reinforcing environment, not to mention consume public resources that could be better employed -- like targeted education clearing the minds of at risk individuals on what are the likely outcomes of criminal life compared to alternatives.