The West tried institutions (poorhouses, asylums). But forced institutionalization just isn't compatible with basic human rights. It was also expensive and failed to provide a venue for effective treatments.

Starting in the 1970s the West deinstitutionalized[1]. But at least in the US we never sufficiently funded community care, which was supposed to replace mental institutions. So the severely mentally ill end up living on the street (where they're often the victims of violence[2]) or in jails and prisons (which if you squint sort of resemble mental institutions, though without the emphasis on medical care).

Whatever we as a society try next, we need to recognize that with our current medical knowledge there are no cures for mental illnesses, only management. So our approaches need to be both humane and long-term. Returning full-circle to institutionalization in jails and prisons utterly fails those tests, offering brutal conditions, short-term containment, and usually insufficient medical care. We can do better.

[1]: http://en.wikipedia.org/wiki/Deinstitutionalisation

[2]: http://en.wikipedia.org/wiki/Prognosis_of_schizophrenia#Viol...