Furthermore, it misses that we might be somewhere better than here had we not had ads. (I'm not saying it's a foregone conclusion, just one of many possibilities not mentioned.)
Part of it is due to the fact that advertising has worked just fine without tracking for literally hundreds of years in a variety of different media.
As to your points, though, paid content is great. If people won't pay for it, they probably don't actually want or need it.
I don't want to see any ads. No ad is relevant to me, so all ads, even supposedly targeted ads are random. In 30 years of using the web, I have literally never once intentionally clicked on an ad. So better tracking for ads gets me nothing and loses me a lot.
Wealthy people already subsidize lots of content for political gain, so nothing is changed by having it be targeted ad supported or not.
Most small companies cannot use the legitimate ad networks because they don't have enough volume. So this is a non-issue.