The same crowded street problem happens where I live in NYC, but it generally works out as people get into a rhythm of either raising their umbrella up over the level of the other person's umbrella or lowering it down below the level of the other person's umbrella.

But then in NYC you develop a much closer "personal bubble" when you have to endure being crammed onto the train like a sardine during rush hour, so in comparison a little umbrella bumping is barely noticeable.