Less block space means higher transaction fees which could reduce BTC’s utility.
Higher transaction fees don't necessarily reduce bitcoin's utility. But, let's say they do. Don't we already scale with the lightning network? We've accepted the fact that there aren't solutions for the first layer.
Whatever you believe that can scale on a global level and with reduced usage of second layer solutions seems utopian, but you're free to implement it on a fork. Bitcoin is too expensive project for such radical changes.