I agree with you that the government should set minimum standards as to seat width and seat pitch. 18 inches seems a reasonable minimum as to width. 34 inches seems a bit much for pitch. Without regulation there will be an unending race to the bottom. Yes, fare may increase slightly, but airlines will still offer discount tickets.

A lot of discount European carriers charge for water and soft drinks and I love it, because when they are free every single person on the plane will get something and it will take an hour or more just to get to the middle of the plane. When they charge they can serve the whole plane in just a few minutes and everyone who needs a drink to get one really quickly.