Short answer: Unless you advocate cloning, your hypothesis in my view not logical or attainable.
Long answer: This notion that we can just breed more "good stuff" and get rid of the bad is idealistic.
Putting money and all else aside, it assumes you can cookie cutter dog production. A breeder of Dobermans back in the 1970's (actually she started before that but I was too young to remember) - anyway, she was THE Doberman breeder in Canada. Her dogs were virtually in every pedigree - and for the most part, they were outstanding.
Her Kennel - Schaufeline (spelling ) was the foundation of almost every breeder - certainly in Ontario and much further.
Her "formula" for breeding began to deterioate in the 1990's - and health problem rumours began. The last Doberman I saw of hers was a tiny, greyhound waife of a dog - fugly - and while I am sure her age and other reasons had a bearing, her kennel faded.
Its a story that has been repeated in GSD - and likely every "popular" breed on the planet. Once a dog becomes marketable - the gene pool is flooded with it, and line breeding becomes in-breeding. Breeders will justify anything to have that dog.
Nature is not a fan of capitalism nor does nature understand "good or bad genes". ( what scientifically is a "bad" gene?)
So....why are the gene pools getting smaller? Because the MOMENT a dog becomes a champion, or world champion - everyone and his uncle wants to breed to it for money.
The GSD has been well documented - Seiger lines have carried spondylosis from the 1960's to present day - its entirely and completely the fault of "ethical" breeders who want to breed "good genes".
And yeah, the fact we euthanize millions of dogs a year won't change either - because if and when we have better dogs - the price of those dogs will go UP - and breeders will make it virtually impossible to own them unless you (a) show them and/or (b) breed the living crap out of them on co-ownerships. To keep prices high - and minimize competition - breeders will continue to enforce spay neuter - and restrict breeding's to all but THEIR sire.
Circular logic takes us right back to the start - we have a few breeders with exceptional sires and dams who control the population of that breed.
The lowly family who wants a companion or pet will still go to the "B" list breeder, or the pound, or (gawd forbid) the pet store.
I recently saw an Ontario Doberman litter listed on kijiji of all places and they wanted $30,000 for a pup outright - I think it was $10,000 to have one on a contract. The guy CLAIMS to have imported an outstanding sire from Euro or Russia - anyway, he obviously wasn't bringing the dog over to increase the gene pool. You want one of those super dogs - you mortgage your house, or agree to a breeder having despotic control over you and your dog for life .
The world is not ready for "ethical" breeding.