Generally speaking libraries and digitalization of works that are in the public domain are completely unproblematic, and I applaud such private efforts (e.g. the Gutenberg Project), although government has no business doing running libraries. In general, with copyrighted material libraries become problematic, unless the IP owner explicitly chooses to allow libraries to use his work, and with digital books this becomes even more problematic. There are several solutions to this and one model is that philanthropists who want to share books with the world can make a deal with the author to e.g. buy the rights to place them in the public domain, or to buy a certain amount of licenses at bulk prices.

Libraries made a whole lot of sense back in the days when the act of copying books was the expensive part, but nowadays libraries are really out of date.