This makes sense to me, but I don't see democratic countries able to stop themselves before it's too late.

What comes after?

This exact problem is why I liked Bitcoin a few years ago. Although with the scaling issues, it seems less useful than I expected.

Do you think raising the block size would create more issues? Although it seems BTC is committed to layer 2 scaling solutions.

Raising the block size creates numerous issues, especially for nodes running on consumer systems with limited storage (which is most), and the network starts to become more centralized. We don't want the majority of nodes becoming SPV clients/pruned nodes, due to full blockchain storage costs.

Democratic in what sense? I don't think any country asks their citizens what about their financial issues.

All political parties have an economic policy and the voters try to elect governments that reflect their views.