At first I was saying the same thing than you but then I realised how it works.
In fact, your damage do not raise, but as you level, you will realize that you canno't use higher spell until you get a certain amount of magika / regen.
In fact, when you get your super Fire Ball / Ice Tornado / Chain lightning (srry I don't know the exact english name I play in FR) and you only do not have enough mana to spam them, cuz u realise their damage is 1dmg for 1magika (roughly).
Which gives u 2 choices,
Fireball (rank3) for more damage but my mana will melt like an icecream on the road in august during a shiny day
Firebolt (rank2) for more "damage per magika", I won't wtf pwn my ennemy but OVERALL I'll do more damage.
Then you get more mana / mp5 / reduce mana cost and you finally can spam Fire ball.
Soon after this point u can get rank 4 spells which still cost WAAYYY too much mana.
But after some point the scenario will repeat and u'll be able to cast these spell like.
Finally u get the super omg spell (Master).
But they cost so much mana that u don't do them unless there is a lot of ennemies.
And then, if u invested somewhat some time leveling enchanting, you should reach 100 enchanting quite soon. When you get 100 enchanting, u enchant a ring / a neck / ring+neck for double destruction spell cost (but 75% reduce should be enough otherwise u make ur perks mana cost reduced useless).
And then... fine, u're damage don't scale.
But think about it.
fireball rank 4 = 90dmg
90x2 = 180dmg
consider dual casting (I think it's 50% dmg bonus... if someone could confirm)
u do 260dmg every 1.5sec.
And u're not even in melee, and u stunlock ur target, and it's aoe.
So u're power do not comes from "damage itself" but from "mana" cuz higher is your mana (or lower are the cost of your spell) more u can spam, and trust me,
When I have my frosty tank
+ Blizzard
+ Spamming Ice lance
+ running around with my frost aura.
It's freaking awesome how EVERYTHING DIES at the speed of light (and do no dmg cuz their stamina is at -100)
Mages are fine, but I agree, the leveling can be though against high hp ennemies cuz "u don't have enough mana".
Lowering some spell mana cost could be great.