That approach is obviously equally unproductive.
The approach is to try to reform them. Get them psychiatric help if that's what's needed. Put them in a prison that doesn't just punish them, but also teaches them how to be useful members of society.
On the other end, an ounce of prevention is worth a pound of cure.
Well before that point, make sure everyone has equal opportunities while growing up. Ensure all citizens get taught how to be responsible with money and how to make intelligent life decisions in school. This helps a lot by itself.
Despite the above, some people may still fail, due to bad luck or due to actually not being great students. For these, institute a "poverty floor" below which no one may fall. People who are not desperately poor are less likely to commit crimes.
Of course, yes some people are lazy. That's unfortunate. Lazy people should still get some money, for the simple reason that it's a lot cheaper than dealing with criminals and crime. Obviously we shouldn't give them too much, since then they stay lazy and/or it just drains our coffers dry.
Worse, some people are just plain bad. That's when you put them in prison. But even there you can attempt to reform them. Those who don't reform stay in prison or get rearrested soon enough. Those who do reform can get out and have a second chance.
If you think all the above is hypothetical, it's not. Many western countries apply (at least some subset of) the above policies. This is a of course a very short summary of a very large and nuanced topic.