Restitution Vs. Jail (L60)

Please Note: As simple as this question seems, it is not. I even brought it to an online forum to discuss with other liberty-minded people because I was so stuck. Then I realized my fault; the question is not black and white. I cannot offer a one-or-the-other answer without more information, and so this is my take on it. I would love feedback on my response, as well as other opinions and explanations!

Is restitution to victims better for society than jail sentences for criminals? Explain.

It is not unknown that cages create criminals; according to the NAACP “the US is 5% of the world population, and has 25% of the worlds prisoners”. When we place a human being into a prison environment, they are exposed to a high concentration of infectious diseases, dangerous and malevolent behavior, and violence. They are not in a setting to recognize their behaviors and correct them; they’re in prison for punishment, not rehabilitation. Because of this fact, two thirds of prisoners will re-offend. Billions and billions of dollars are stolen from people each year to fund the degradation of society.
So, given the circumstances, restitution to victims would seem the correct route to travel. However, then one must consider, who will decide the restitution? Who will enforce the restitution? What happens when a thief steals food and then by the time he is caught, the goods are gone? Should he have no money, how could they force him to pay restitution? It would be physically impossible to force him to give up something he did not have. All of these questions it seems can be easily answered with “the government”. But, one must consider, if they conclude that restitution to victims would greater benefit society, would the government intervention that comes with it also benefit society? No.
Both of the options offered result in the coercion of another being, which I do not support. That brings me to the conclusion that these answers offer me a lose-lose situation. Sending a criminal to jail only worsens his future, and the future of society. On the other hand, restitution may not be practical or applicable. I do not believe that either of these options (as is) are going to better society.