Have you read BIP101? It proposes jumping the blocksize limit to 8 MB next year, and then doubling of the blocksize limit every 2 years, for 20 years. That gives us 8192 MB blocks in 21 years. And that's what the sane bitcoiners should want?
1) It's easier to soft fork to a lower blocksize in the future if blocks are "too large" since it only requires miner support.
2) Really - you think that 8GB blocks in 20 years is obviously crazy? 1gbit bandwidth, although not widespread, is currently available
today. It seems hardly unreasonable to think that technical advances in two decades are not going to be able to keep up. If we're wrong, refer to #1.
The issue with a large increase is it creates a slippery slope. Raising the blocksizing is essentially subsidizing transactions. If we persist on doing that someone WILL take advantage of the free space. Now what happens if 8MB blocks get filled up way before the intended increase? It is not an improbable scenario that we could see bigger block get filled surprisingly quickly & the increase will have been more or less for nothing.
If we take the decision to continue subsidizing transactions right now because of pressure from certain groups we will inevitably create a precedent and reinforce the belief of users that they somehow have a RIGHT for block space and therefore make it forever more difficult to refuse it. Imagine the subsequent pressure if Bitcoin grows by a couple orders of magnitude and users start seeing their transaction fees go up when they were told it would forever be nearly free.
This here is an opportunity to put a check on these false expectations and discourage business plans that were planning to unnecessarily fill up the blocks w/ their own transactions. People need to understand that there is cost to having this system run securely and we should stop trying to externalize them.
You haven't done the math. It's far easier to accommodate 100,000 transactions with a $0.05 fee/trx in a block than get 1000 transactions with a $5 fee/trx. Larger blocks = more trx = more users = more fees.
Also, there is no guarantee that demand will come because max block sizes are larger. We aren't in the "Bitcoin's success is guaranteed" universe. It's going to take a crapload of work to get 100m people using Bitcoin and higher fees are not the way to get there.