I think the argument you are making makes sense. Harm reduction and rehabilitation is the way, not this dumb prison system we have.

I believe you mistake an aspect of his argument. I don't believe he meant to insinuate that prison and harm reduction are mutually exclusive, rather he says that the question is whether prison is punishment or harm reduction. If there's no free will there's no reason to punish, but there's certainly reason to reduce the possibility of harm, and jailing an individual that is causing harm (and will continue to do so) is one way of doing that.

As someone else in this thread put it, if we could jail hurricanes to prevent them from doing harm, we would.