But when the top 19 pay rate drops below average VPS hosting prices for a witness, why would anyone want to run a witness?
Don't worry. There are people which care not only about money. If there will be a problem with number of witnesses, I can personally run 4 witness nodes on my single dedicated server.
Being a witness is also a privilege. If low price would cause some witnesses to resign, then I would prefer to have low price for some time.
From people which decide about future of whole network (whether to accept or reject particular hardfork) I expect more faith in end result.
If being a witness was a privilege, why do we pay them? Shouldn't they be paying us?
My argument against an interest accumulating derivative like SBD is economically sound, and the way it works now flies in the face of every other business practices of every banker on the planet. Liquid assets you charge interest. Illiquid you pay. SBD is liquid, SP is illiquid. SBD gets 3% interest now, SP only gets maybe 2%.
It's not any wonder at all that the price of Steem keeps falling, to keep this magical US dollars that somehow increase ahead of the rate of inflation (somehere between 2 and 8%), someone is paying for it. That's everyone holding Steem and Steem Power.
I don't want steem to die and you can already see on the Witness Leaderboard that backups are dropping like flies. It will be a crisis if the cost of running a witness is greater than the pay rate. You can be the first to volunteer to pay for keeping a dead network and paying interest on liquid assets contra to the laws of economics. I'm on a crusade about this now. It's not rocket science, but people have some superstitious beliefs about the Federal Reserve's shell game currency system, stopping them from admitting that logic is against their faith.