If Hashem would not create those people whom He knows will turn out bad, then we would have a world in which there is no active Bechira.
Instead, He set up this zone for all His creation to bring out their potential virtue. And the good will shine out from within the murky atmosphere. This way we are choosing Hashem.
As for the Nahama Dikisufa, I don’t see any contradiction there. What you do get is deserved and well received and what you don’t get, for lack of accomplishment, is embarrassing.