Amos,

What you are talking about is not the time out that is being used so uselessly throughout the world. You are talking about "shunning" as used by the Amish. This is far more destructive than any spanking. The inner city is full of kids wondering if anyone cares they are alive because daddy didn't stick around and Momma's too busy trying to keep the families head above water to pay them the attention they really deserve.
Time Out usually is a punishment that only lasts a short time and unfortunately does none of what you suggest. Especially in a world with such a short attention span.

Denying affinity, communication and denial of things that say "you are real" would get you booked with "Child abandonment and abuse" charges in almost any American city.