The block reward needs to be a sufficient incentive to provide enough proof of work to keep the Bitcoin system secure until transaction fees have enough value to take over. If the block reward was too high, the price would keep dropping and everyone would be playing "hot potato" with their Bitcoins. If the block reward was too low, the network would be insecure and unreliable.

My guess is that Satoshi underestimated how successful Bitcoin would be and as a result there is much more mining than there needs to be.