You may as well ask, what damage has sharing food freely during a national emergency done? What damage has sharing housing? Money? All are at least as important as books, and all are worth sharing during certain forms of emergency, but I hope we'd agree it would be quite wrong for me to walk into my local grocery store and walk out with everything without paying, saying "For the public good!", and then give things out. Perhaps we should nationalize the grocery stores and the apartment buildings and the banks - but such a decision should (at most) be made by the government, not by some individual non-profit.

Again, there are less drastic measures that don't cause this. Expanding Controlled Digital Lending would actually mean the authors lose nothing, and gain them readers. (Or, you know, do this except only for orphan works or not-available-in-ebook works or something. That would also meet the stated goals.)

Or simply have the Internet Archive contact authors, say "We scanned your books into e-books, want to make them freely available? You'll lose nothing and gain readers," and then make it their decision.