I fail to see the problem with those new TLDs.

Certain gTLDs have been borderline scams. The most infamous one might be .sucks, an extortion scheme charging an annual protection fee of $$$, complete with the pre-registration process when you could buy <yourtrademark>.sucks for $$$$ before it’s snatched up by your enemies.

They also screwed up some old URL/email parsers/sniffers hardcoding TLDs. Largely the fault of bad assumptions to begin with.

Other than the above, I don’t see much of a problem. Whatever problems people like to point out about gLTDs already existed with numerous sketchy ccTLDs, like .io. Guess what, the latest hotness .ai is also one of those.

I still wonder why we need that arbitrary restriction anyway?

If we allowed all possible TLDs, then we'd need a default organization to administer them. The current setup requires an organization to control each TLD, which allows us to grant control to countries or large organizations. The web should be decentralized, which means TLD ownership should be spread across multiple organizations. More TLDs with more distinct owners is a better situation than one default.

I guess ICANN needs to get money somehow.

Why can't it just get funding from the government?

Aren't they already getting an outrageous amount of money for essentially supervising a txt file?

Most services can be described by "essentially supervising a txt file" if you are succinct enough.

Which government?