It is more complex than that. Crime rates in the US are generally on a par with those in other developing countries - the only significant difference being homicide, but since homicides are a rather tiny portion of all crimes committed, their effect on incarceration rates is negligible. A lion share (perhaps half, I do not have the stats handy) of the US prison population are non-violent drug offenders and parole violators - lest you wonder, a possession of a cell phone can qualify as a "parole violation." In short, about half of the inmate population is incarcerated on frivolous charges.
However, that does not invalidate your claim about the fundamental criminality of the US society. It simply means that prosecutors choose to focus on petty street crimes while ignoring white collar crime.
That prosecutorial discretion turns the US criminal justice system into a travesty - similar to that in Nazi Germany or Stalinist Russia. You have basically a system that in theory guarantees all the nice freedoms and liberties, but in practice gives a free rein to prosecutors to target their efforts as they see fit. While being prosecuted does not automatically translate to being convicted (albeit greatly increases the probability of conviction), no prosecution means no conviction with 100% certainty. This is why small time pot smokers get life in jail, and thieves like Kenneth Lay laugh all the way to the bank.
That is probably the most scandalous aspects of the US criminal justice system. As someone said, in the US the most scandalous is what is legal - and I may add, what enjoys a virtual immunity from prosecution.
Wojtek