Generally speaking you are correct however not all tickets are created equal. Many tickets have flexi dates so a person not showing up doesn't mean an assumed profit for the airline. This is even more so if that individual is a high flyer, elite member status etc.
Anyway not saying I defend the UA in this case.. I don't.. they and the CAD officer are scumbags for doing this to that passenger!
I likely would've reacted the same way had it been me in similar circumstance whereby I needed to get somewhere ASAP and cannot delay my travel plans.
Well no one is forcing the airlines to offer deals like flexi tickets, and typically flexi tickets are only available on flights that are almost never fully booked. So that is really a non-issue.
I am willing to bet even if you banned over booking, airlines will still offer flexi tickets on selected routes.
That is because some routines are always going to be hard to fill on certain times. And also, unless offered as a rewards option, flexi tickets will cost more, often significantly more, than a fixed date ticket. So if the airline did their maths right, they should still come out ahead at the end of the day.
The demand and supply mismatch is hardly an unique problem faced by airlines, and if every other industry can make avoid profit while not being allowed to sell more tickets than they have seats for, the airlines have no excuse to say they need special treatment that can be so damaging to customers.