I think earth should be cut into thirds.
1) All peaceful, hard working, respectful people get a straight-cut third containing the North and South Americas as well as Greenland.
2) All the criminals, prejudice, sick minded, war-loving people can all go live on the third which is cut containing Africa, the Middle East and China but not Japan.
3) The people that don't really fit into either category get a mirrored C shaped area containing Iceland, Russia, Japan, Australia, New Zealand, Malaysia Antartica etc.
Here's a reference map:
Basically, the peaceful land will be awesome, there will be no need for damn cops cause anyone who does something bad automatically gets put into neutral land and they have to prove themselves good to get back into the good land. Porn is allowed in the good land.
The neutral land will be basically like how earth is today, except if someone does something really bad they get put in the bad land. And if someone does something really good they get put in the good land.
The bad land (AKA: Hell) is governed by Hitler, the Devil, and George Bush. It is a place full of war, hate, name calling and rednecks. They will eventually kill eachother off and it will be just a waste of space. They only get fat chick porn here and it's never on cable.
In between each land is an indestructible force field that nothing can get through. The peaceful land has a very nice o-zone thanks to all the hydrogen powered cars and people who aren't idiot rednecks. So... there's no global warming for us, and we get pristine winters and great summers. Everything is free but everyone has to work, if you don't work, you don't get free stuff, easy as that. This means free transportation for anyone who wants to go places, so you can go for vacation in the bahamas in the summer, or even ski in argentina in the summer. And then in the winter you can go your favorite ski resort, which will be better than ever and you will never need to lock up your skis or anything.
The good land is governed by the gods by the way, but they all get along, all the greek gods, muslim gods, christian gods, asian gods, indian gods etc. Also, everyone in the good land is blessed with good looks and perfect metabolism.