I agree, and I'm not suggesting that we turn the clock back to pre-1980's. The solution though, was no more to throw open the doors and say "To hell with this", than it would be with our broken prison system now, right? We needed to reform it, replace it, alongside our prisons.
We have to get over our need to punish, and start to count the dollars, realize that they can improve and save lives, and start rehabilitating. We can't do that when we have pathological cases mixed in with petty criminals, passionate "one-timers" and the like.
By the same token, we can't stop mass shootings when our standard treatment for schizophrenics without money is, "Find a nice streetcorner buddy." Most will die miserably, but of course a few will snap.