Listening to a podcast today, I heard, "Market externalities are why we need governments"

I find this argument uncompelling. Yes, market externalities exist. But they're dwarfed by government externalities.

Did W pay the full costs of the patriot act?

Did O pay the full costs of the ACA?

Now swap "full" with "any"

Does any politician care for any consequence beyond the length of their term?

Governments as the solution to market externalities is like gouging your eye out because you contracted pink eye.