This argument misses the point. In the process of building more, you have made a lot of people richer/happier/commuting less, because now they can live within the city walls. Making a lot of people richer/happier/commuting less should be done everywhere where it's possible to do so.
> The problem with "just build more" is that eventually you run out of space the same as now, only you get to do it with a worse quality of light / space / light / traffic / noise / etc.
By admitting that you will eventually run out of space again, you acknowledge that demand will always keep increasing until saturation even if you build more, _because people are even more interested in denser city lives and its work/leisure/community opportunities than they are interested in suburban-type light/space/traffic/noise_. If people were interested at all in suburban-type light/space/traffic/noise, dense cities would not be in such high demand.