Scarcity in block space is desirable also. Competition for block space keeps fees up, which will replace the subsidy over time, keeping the mining incentive healthy.
Scarcity in storage space (i.e. my ability to keep a copy of the block chain on inexpensive hardware) is already here ... some people struggle to set up a node for financial reasons. The fewer people can financially run a node, the more centralized the network becomes.
Cheap transactions should rise to Level 2, 3, and eventually 4 as each level becomes overburdened. This evolution is natural, expected, and desired. ... Assuming you want bitcoin/Bitcoin to expand to serve as the global currency.