Oh yeah. Economies of scale. Surely he hasn't heard that one before. Good on you to point this out.
I'd say you clearly don't understand english maybe? Did you somehow miss this paragraph ?
Adam Back: The worry with extremely large blocks is that they can be used to exacerbate a selfish mining attack. If youve got a large miner or a couple of large miners, they can create very large blocks and other people wont be able to receive them or process them in time. So, they will gain an advantage in mining.
Bitcoin chose its parameters to make the advantage minimal so that its a level playing field between small miners and large miners. Right now, the interval between Bitcoin blocks is ten minutes. And the approximate time it takes to propagate, or send a block after its found, across the peer-to-peer network is about 10 or 15 seconds. You want the ratio between the propagation time and the block interval to be high enough, because, as a miner, while youre waiting to receive a block, or while youre processing a block to check its valid, youre unable to mine. So, you lose money.
By having larger blocks, its going to take a longer time to process them. So, its going to favor miners with higher bandwidth or who are more centrally connected via high speed links to other miners. It gives them an advantage.
If you increase the block size rapidly, the level playing field is eroded. If it gets eroded too much, once miners are able to create blocks that only they and a couple of other big miners can mine, they can exclude everybody else because [other miners] cant keep up.
The block size is there to put a check on these economies of scale and level the playing field.
You don't need that check and it causes more problems than it solves. There's no such thing as a level playing field. Some miners get their electricity cheaper. Some live closer to a main internet trunk. Some are born with higher IQ. Some have more access to investment capital. Life isn't fair.
It will take longer to process larger blocks, but bandwidth and processing speed increase all the time. The advantage is only temporary like any advantage in a highly competitive industry. If only big miners can compete, then become a big miner or sell out to one and become their employee. Effectively the only real barrier to entry is capital, BUT THIS IS CAPITALISM, BABY. The only way to remove that barrier is to exit the free market. That causes more problems than it solves.
I heard a whole lot of griping about mining pools, but now a larger block size will allow an individual large mine to compete with an entire pool, and you're not happy with that either!!
Scale or die.