^ Did you read the entire post? The OP fully addressed the effect on fees:
He neglects that there is no reason to pay fees, if there is no limit on supply.
just because there's the POSSIBILITY of 20MB doesnt mean you HAVE TO use it.
Since there is no marginal cost in including a transaction to the current block, a rational miner will always include a transaction with a non zero fee,
before it is included by any of its competitors.
Therefore a lower bound on fee will not work without a cartel or without a competition for space.
I prefer algorithms over cartels.
The chance of orphan blocks should provide some competition for space. Miners may find with current network topology a 4MB block is the right size. As more nodes and faster connections occur size can be adjusted. Is a hard limit an algorithm?