Depends on the type of physical punishment.
Some kids respond better to punishment, but the mojority of them, if you start at an early age, can be taught to do other things instead of simply punishing them for their actions.
"Don't draw on the walls, since you did, you have to clean it up, and from now on, draw on paper instead."
It's all about positive and negative reinforcement. That's how you teach someone. Punishments really doesn't do it in the sense that a lot of people think. Sometimes, though, you have to to get the point across, especially if you have a child that doesn't respond as well to positive reinforcement.
The kid does something you don't want them to do, you make them fix it to the best of their ability. Even if they can't erase magic marker off of the walls, make them scrub it for a while with a damp cloth, and when they're not watching, clean it off yourself with some cleaning solution. But you must provide them with an alternative to their negative actions, or else they won't know what to do instead of the actions that their just being punished for because they weren't shown an alternative.