Did you read my "blocksize economics" blog post?
yes, I should take this as request for comment in the thread more appropriate for that.
I don't understand why you think MAX_BLOCK_SIZE necessarily has anything to do with "supporting mining" (aka securing the network).
Simply put: It is the supply side of the mining resource which miners are selling.
This should be clear enough.
I can go into more detail in its thread, tdryja made some decent comments here already.
What stops this from happening:
Big miners accept off-blockchain payments from big merchants and exchanges that want their transactions confirmed. They are included in very small blocks with zero fees. The blocksize stays at 1MB forever.
Lets look at incentives:
Big miners: have cozy agreements with Big Merchants. Those agreements keep the little guys out.
Big Merchants: same thing. The need to get an agreement with a miner to get your transactions accepted is a barrier to entry for the Little Guys.
The fear of this theoretical arrangement was addressed in tdryja's initial post, and further explained in the latest.
I do agree that any feedback mechanism such as we are seeking with this line of discussion holds the potential for creating a perverse incentive.
Admittedly there is also a philosophical basis for what may seem like a useless discussion to some since the Chief Scientist of The Bitcoin Foundation has already decided and is seeking to end discussion.
Consider the existence of a central authority, employed by a member organization with the charter of interfacing with governments. The Chiefs then take the role of arbitrarily deciding on the supply and adjusting as the organization's economic advisers suggest, we then have progressed towards replicating the Federal Reserve Bank.
It is nothing personal with Gavin, I like you and love what you do. I think your proposal also could possibly work in the short term, except that it sets a most dangerous precedent. One risk is certain, and that is that
those who come after us will not be us, but it is our hope, and the effort for which we strive mightily, that Bitcoin will still be Bitcoin. It is this which I am hoping to protect by seeking for a way to put this authority on the block chain, and not on the decree of any person now, or in the future.
Both of these risks are theoretical, (a perverse miner/merchant Cartel, and a perverse Central Authority) On balance, the risks of possibly creating perverse incentives by basing decision effecting the monetary support of the network on the evidence provided by the block chain, and decisions by unknown people of the future who may have their own perverse incentives that will be more difficult to observe, I would give the role of this governance to the Bitcoin block chain. Simple because there it will be exposed and may be seen, and is also a much easier perversity to dislodge.