Conclusion
Restricting the size of blocks to 1MB permanently is great if you are a major financial services company. You could co-opt a very robust network, act as a trusted intermediary and force direct users off the chain onto centralized services. For the same reasons, it is a horrible idea if you even want to keep open the possibility that individuals will be able to participate in that network without using a trusted third party as an intermediary.
Enough with theoretical calculation, we need some real world examples that show how people will react when they are facing a hard limit. Humans are adaptive, they will always create solutions to adapt
I'm still not convinced that a designer of a monetary system should think like a service provider. A service provider always try to satisfy its customer since he need to make money from his customer. But designer of a monetary system has a totally different sets of concern than a service provider
If you look at Federal Reserve's dual mandate, they are low unemployment and low inflation. They never worry about transaction capacity, since that is a too low level of concern: Humans have been transacting slowly for several hundred years and central banks have never tried to improve on that area, it is the mission of commercial banks and payment processors
Of course bitcoin is different, it is decentralized, thus require different priorities than a centralized monetary system. But still, the way of thinking matters
So you 're saying that Bitcoin should act like the Federal Reserve and serve the banks who in turn will serve the public?
If yes, can't we just have Bitcoin act like Bitcoin and nothing like ANY bank or monetary system has ever done before?
I mean, we have seen how all types of money failed until now.