arizonadude - 3:40 pm on May 24, 2010 (gmt 0)
Poor organics means long-term decline in traffic. Most corporations think on longer timescales than their detractors.
In a normal situation, I would agree with you however Google is not your normal company. They operate under the assumption that they alone know what we want and their going to give it to us whether we want it or not.
Since most average people who use Google are like sheep, the average person is not going to notice anything and in fact a whole lot of average users don't even know what a sponsored link is. They just click the link on the page that best matches what they looked for. I've ran into many people who thought the sponsored links were just regular links and they said they always clicked those first. They had no idea that clicking those was costing somebody money and making money for Google.
There are still many webmasters who live in a fairy tale world that Google really won't do evil and they just want what's best for us.