Yeah, I don't agree with that. Interventions that force the internalization of non-internalized negative externalities would tend to reduce overall costs. That's just not a very well thought out universal axiom, in my opinion.

Another example is internally harmonized markets, which provide economies of scale advantages that would not be realized in more fragmented markets. A good example here was the US federal government mandating a standard rail gauge for all railroads. Before that happened, there were like more than 5 standard gauges for railways across the US, and trains and cars could not move from railway to railway. After this the government imposed a single standard, transportation costs significantly fell.