In this case, if you allow miners the liberty to include as large blocks as they like, an external actor that hates bitcoin can just say to a miner "you know what? I'll pay you more fees than what the others are making, and if your block is orphaned, I'll pay that too - just make sure to put in there as many txs as you like".
At that point, the enemy of bitcoin who has employed "bad miners" for very little money (compared to the multi-billion dollar interests of banks/payment companies/governments), can bloat bitcoin to death for extremely small costs.
Just because the miners (in this hypothetical) are allowed to create blocks as large as they desire, does not mean that other miners are forced to accept those blocks as valid. If such a large block (presumably the result of your bribe above) is deemed detrimental to the system by the other miners (i.e., detrimental to these other miners' interests), these other miners are incentivized to orphan that block. Resulting in no problem to the network. The 'problem' solves itself.
Not really.
1) The network is being spammed every day - even with stated spam attacks and stress tests. These blocks are now sitting in the blockchain as bloat. If the rejection scenario actually happened, they wouldn't be sitting in there.
2) Let's asssume I'm the exo-attacker and plan to do what I laid above. I also hire a programmer, modify bitcoin core to use GPU for validating big blocks, the ability to process blocks is raised significantly, and then release that software as open source so that miners will use it to "speed up new block verification and help scale bitcoin".
By employing GPU power *and* the fact that network propagation between the large miners is good, there is no valid reason for others to reject very big blocks because I've also given them the tools to process them. I mean the (other) miner is not going to need minutes to process them, so why not?
(this could happen too:)
3) The larger the miner, the biggest the incentive to accept even bigger blocks so that they can crush the opposition who can't handle them. It's like corporate cartel forming. You lower the price (to your detriment) until others fall out of the market. And then you raise the price. You can do the same with blocks. You accept the largest blocks possible, so that those who can't catch up fall behind. It's their problem, not yours. The less they mine, the more you earn.
All these things are fucked up scenarios. Personally, I like to think as an attacker - not a wishful thinker. I want to think the worst that could happen so that I can prepare for it. Not make good assumptions and leave "holes" that trucks can drive through.
So, if I were the banks, what would I do to bitcoin? One of the things I'd do, would be to bloat it to unusable levels, increasing centralization and decreasing the ability of people to adopt it directly - forcing them through centralized means. But the 1MB is an obstacle to this attack vector. So I would have to "raise awareness" (=divide the community) in order for parts of the community to ...demand the rope with which they'll get hanged (in our case "big blocks"). And these blocks are useless except for spamming. Every day, tens of thousands of txs are processed for 0 to 0.01$ per tx. If there was actual demand, this wouldn't be happening.
Satoshi said to increase it when we are closer to needing it. Need is a very specific word. The blockchain covering every possible spamming tx with near zero fees is not a need. Increases should be in line with actual demand. IMO the network should operate by balancing
a) the covering of legit txs
b) room for expansion or spikes
c) covering of low-priority txs and even some spam, when there is no (b).
Alternatively, you can just increase blocksize but demand a high tx fee as a minimum. Monero used adaptive block size and they quickly found out it doesn't work when spammed. So they raised the fees to pretty high per tx after their bloat attack, in order to stop it. It was a case of exo-attack, the external game theory. It was presumed to be an attack by an other altcoin (bytecoin) - so all the internal incentives / internal game theory of miners acting this and that, were useless, and the rule book had to be rewritten (high tx fees) to prevent external actors from attacking the coin. Why would I pretend that these things haven't happened or aren't happening in bitcoin? Why would I make best-case assumptions that everything will be fine? That's not how you make a robust cryptocurrency.