"streets flowing in diarrhea" ? Man, you are a poet !
But take moment to consider what you wrote:

educate people to shift from a culture of shitting on the streets to one of, well, not shitting on the streets?
Yes, indeed ! Educate people ! Scold those who seem to not want to heed ! That is very different from "fining them $1000" ! The latter is about monetary incentives, the former about social incentives. They are complementary but cannot replace one another

Consider my rephrasing your mission, from

Mission: We need to devise and implement a new economic system that rewards the behavior we want with the most competitive returns while sacrificing the least in terms of trade offs.

to the following:

Mission: We need to devise and implement a new economic and social system that rewards the behavior we want with the most competitive returns while sacrificing the least in terms of trade offs.

The implicit argument: it's very hard (perhaps impossible) to devise a better system while reducing everything to the economic dimension only; while, although complex, we stand a chance of managing to create one by leveraging the basic needs of human people to feel safe, to be loved, to belong to a community, to learn and be admired for what they do and what they know (all of these with a certain link to monetary rewards but not a full 100% hard link)

You write further down:

Focusing on UI or communities as a solution is like getting diagnosed with testicular cancer and deciding that the best way to treat it is by getting a nose job and your anus bleached.

But frankly this is just your opinion and let a full body of scientific research in social sciences and economics tell you: you are wrong, it actually works. See for instance Mark Granovetter

even in market societies, economic activity is not as disembedded from society as economic models would suggest.

Or Dan Ariely's "Predictably Irrational". Or many other