I'd also like to point out that the same 'terrible imbalance' that is caused by racial ASIs is caused by one person having a one +1 better magic item than others. And if we are expected to always keep all characters at the same level appropriate bonus on the pointless magic item treadmill, then I have even less interests in the magic items.
I actually think that's a super-interesting point, but I wish you had presented it as such, and something worth probing and exploring to reach understanding, instead of as (unless I'm mis-reading you) evidence of the weakness of the opposing position.
I personally dislike racial ASIs, but I don't mind when somebody else has "better" magic items than I do. Maybe that's because I know that some day I might get an even better one (or, at least, it will strengthen my position when we start discussing who gets the next one). Or because it's not an intrinsic relative weakness of my character. Not sure.
Although I haven't thought a lot about this issue, I
have thought a lot about why magic items are so compelling, and the answer I came up with may be relevant here: the reason we like magic items so much is that it gives us power beyond the deterministic progression of the rules. Sure, when you turn level 5 you get an additional +1, but that's just baseline progression. When you also get a +1 sword it puts you ahead of that baseline progression, and it feels like OVERWHELMING POWER.
At least, that's my theory.
I do know that in non-magical settings/genres, the absence of magical items always feels like a big hole to me. I think it's why I always return to fantasy.