It's not a question of greed. There is some sort of myth that witness pay is a handout that serves only to enrich witnesses. Perhaps that has been the case in other coins but it is absolutely and utterly false in the case of Steem. Those funds are used to support extremely valuable and important development and community initiatives.

In my case I'm currently running a deficit of about $1200/week continuing to fund these initiatives above and beyond the entire $800/week I'm getting from witness power down (yes I am in the process of rationalizing the budget, but I also don't want to cut off good projects abruptly). My time is volunteered and nodes are paid for out of my own pocket. In other cases there are witnesses who have left their regular jobs and gone full time on Steem-related work, supported in part or whole (though the latter is getting harder by the week) by witness pay. These witnesses are developing and supporting services that you may very well use every single day.

Secondarily, hosting is only a small part of the core job of a top 19 witness in Steem. Witnesses also have very important responsibilities in evaluating updates and deciding whether they are in the best interests of the stakeholders, serving as stakeholder representation in offering feedback to developers on direction (in part since developing updates that won't be accepted is foolish), maintaining the SBD peg, planning for scaling of the infrastructure, and other management and leadership roles. Recently there has been discussion of adding more witness parameters aside from the SBD peg. If this occurs, then the responsibilities of witnesses in deciding on and maintaining these parameters will increase.

The Steem ecosystem benefits greatly from both the work of the witnesses and the witnesses' use of funding to support decentralized development and community initiatives. Top 19 witnesses have critical decision-making and leadership responsibilities and not only should be compensated accordingly but failing to do so increases security risks since the primary incentive for honesty and diligence on the part of witnesses is the threat of being voted out. If the pay is peanuts, getting voted out becomes a blessing, not a threat.

Cutting witness pay by 7/8 is extremely short-sighted and harmful, and also not at all needed to significantly reduce inflation. 90% of the inflation in Steem comes from the high payments to the vesting fund. Reducing the unnecessarily-punitive imbalance between Steem and SP would greatly reduce inflation without the need for other changes.

The one change I would make is to eliminate the exponential escalator that is scheduled to go into effect once rewards reach a minimum. Without the horrendous inflation, the constant rewards won't be inflated to a meaningless level quickly, and there is no need for exponential growth. Instead constant rewards like Dogecoin mining or slowly declining rewards like Bitcoin mining can be used. Either will further limit inflation going forward and prevent exponential long-term growth of the money supply while still providing economically-meaningful rewards for decades if not indefinitely.

I have not considered carefully the appropriate structure for SP in this model (5% per year is exponential and probably not compatible with subexponential rewards), but it may be that voting rights and curation rewards (perhaps enhanced) would be sufficient incentive given the short vesting period. Again, we don't need to be pushing people into an investment horizon they don't want. Eliminating incentives that serve only to try to push people to power up and be locked into a holding period without any functional reason for it would further reduce inflation. Just buying STEEM and holding it without powering it up if you don't want to should be a viable option (unlike now).