It also may be contrary to the eventual goal of usage driven mining, where transaction fees ultimately overtake block reward in value. This proposal may drive TX fees to zero forever. Block chain is a somewhat scarce resource, just as total # of coins. Adding an arbitrary 50% yearly inflation changes things detrimentally.
I'm sending a follow-up blog post to a couple of economists to review, to make sure my economic reasoning is correct, but I don't believe that even an infinite blocksize would drive fees to zero forever.
Commodity prices never drop to zero, no matter how abundant they are (assuming a reasonably free market-- government can, of course supply "free" goods, but the results are never pretty). The suppliers of the commodities have to make a profit, or they'll find something else to do.
That has very little to do with whether or not transaction fees will be enough to secure the network in the future. I think both the "DON'T RAISE BLOCKSIZE OR THE WORLD WILL END!" and "MUST RAISE THE BLOCKSIZE OR THE WORLD WILL END!" factions confuse those two issues. I don't think adjusting the block size up or down or keeping it the same will have any effect on whether or not transaction fees will be enough to secure the network as the block subsidy goes to zero (and, as I said, I'll ask professional economists what they think).
If this forks as currently proposed, I'll be selling all my BTC on Gavin's fork and mining on the other. I suspect I will not be the only one.
Okey dokey. You can join the people still mining on we-prefer-50-BTC-per-block fork (if you can find them... I think they gave up really quickly after the 50 to 25 BTC subsidy decrease).