Everything you just said is literally IRRELEVANT to bitcoin. None of which is a problem. There will ALWAYS be a miner somewhere willing to mine my TXs at any amount of fees exceeding the going rate in the mempool. You are literally only thinking about 1st irser effects and IGNORING all of which would ouccur if the scenario you have put forth would have manifested.
There will always be a market price for clearing any TX of ANY type irrespective of any government decree of legislation. You CANNOT simultaneously believe that bitcoin will pump to the moon (with government help) and also believe at the same time that individuals holding bitcoin will become net wealthier and become a greater and greater portion of the individuals that have influences in the socail strata will sit ideally by and do NOTHING.
FFS, think out longer than just first order effects for Christ's sakes. People's thoughts like yours that dont even take into consideration any other effects than that of negative externalities operating in a fucking vaccum without any input from other sources make my fucking brain hurt.