If Satoshi left fixed 50 BTC/block reward forever, it would still make the system deflationary since the relative reward (compared to the total supply) would slowly diminish over time. Economically, it would work just fine and make transaction fees matter more and more eventually.

There are a few good reasons, in my view, to introduce regular halving and having a completely fixed nominal supply.

1. Psychological-1: perspective of a drastic halving in a few years/months makes people hurry up and grab coins while there are more of them. Of course, on "efficient market" the knowledge of the future is already accounted for, but real markets are made of real people (and we witness that every day on forums, mailing lists and exchanges).

2. Psychological-2: talking about reward is easier when the supply is nominally fixed to some amount (in our case it's 21M coins). We still have a lot of people who don't understand inflation/deflation and "real" vs "nominal" prices and wages. Having ever-increasing supply of coins which is actually deflationary is a hard concept for many to wrap their head around.

3. Practical: having fixed amount of coins makes it possible to fit all possible amounts into 64-bit integer using in transactions. Ever-increasing block reward would eventually lead to an overflow and require a dynamically-sized field which only complicates things and creates tons of opportunities for fatal mistakes.