For large blocks

High transaction fees have many negative effects
There are many negative effects and potential effects of high fees.

In a world of high fees:
 * Users paying high fees directly reduces the value they get from each transaction.
 * If a user is sending a transaction that he'd pay $1 to send but Bitcoin's fees are only 5 cents, then the user gets 95 cents worth of value every time he sends such a transaction. If fees rise to 90 cents, then the user only gets 10 cents of value from the transaction -- about 10% of the value he got before. Over many transactions among many people, this lost value can become very significant.
 * Some Bitcoin use cases become nonviable, so transactions that would have otherwise benefited people won't happen.
 * If a user is sending a transaction that he'd pay 50 cents to send but Bitcoin's fees are 5 cents, then the user gets 45 cents worth of value every time he sends such a transaction. If fees rise to 90 cents, then the user won't make the transaction (or will find another way to do so). The user loses 45 cents worth of value because Bitcoin's fees are too high. Over many potential transactions among many people, this lost value can become very significant.
 * Level 2 infrastructure like the Lightning Network becomes less useful
 * Experimentation with new Bitcoin use cases is discouraged.
 * The easier it is to try out new ideas, the faster innovation occurs. High fees will result in some use cases being nonviable, meaning that potentially useful variations on those ideas (which may have worked even with high fees if tried initially) never get discovered and improved. Entrepreneurs can't properly experiment with products using Bitcoin's test network, because most useful experimentation requires participating in real markets and interacting with real customers.
 * Fewer users makes Bitcoin is more vulnerable to regulation
 * A Bitcoin with fewer users is more vulnerable to regulation because regulators face less public pressure from smaller groups. For an example of this effect in action, see Uber.
 * While block rewards exist, the security of the network is greater with a higher exchange rate
 * More people using Bitcoin to transact will increase the exchange rate, all else being equal. This is implied by the equation of exchange. A higher exchange rate results in higher security as long as block rewards exist, because block rewards are denominated in Bitcoin. Gavin makes this argument here.
 * Security is more sustainable with lots of users paying low fees, vs. few users paying high fees.
 * Given the same level of security, it's better that it be paid for by many users paying small fees as opposed to few users paying high fees:
 * Higher fees mean there is more pressure for any given user to switch to an alternative currency. Users switching to different currencies lowers security and reduces Bitcoin's network effect.
 * Money has network effects, so a money that has more users is more stable than one with fewer users all else being equal.
 * Users are incentivized to migrate to competing cryptocurrencies