Actually, if you pay attention to the self-publishing market, the primary problem is to get people to read the books at *any* price. People's time is money, and if 99% of the self-published books out there aren't even of "publishable" qualtiy (by current main-stream standards), then no-one is going to even try to read and evaluate the books. It simply isn't worth their time.
More than that, the general constraint on people's book purchases isn't money, it's time. Most people have time to read a dozen or so books a year. When prices drop, they can now expand their purchases to... a dozen books a year.
Now, the super-cheap books do tend to cause a big spurt of purchases at the beginning. But once people have 2-300 books in their unread pile, their purchase rates drop back to what they were before. Except instead of spending a few hundred dollars a year, if they're lucky, they can spend $50. That's not enough for publishers to survive.
Now it's true that known authors can self-publish, and actually make more money. But that's only if they've already been published by the mainstream press. For new self-published authors, it's incredibly hard. As a result, only a few dozen previously unpublished authors have made it to the "quit the day job" level, as opposed to the few thousand that join those ranks in traditional publishing each year.
Essentially, the discovery of new authors of reasonable quality is the seed corn of the industry. Without high enough prices, that process ends. Of course, the industry grinds on for quite some time, and no doubt people celebrate the odd author that does make it from obscurity. But unless you've got a decent sized pipeline, the industry is going to slowly die. Not with a bang, but with a "no, I gave up reading a while back - wasn't worth the hassle to find anything worth reading."
And yes, higher prices means a higher quality of entrant. Contrary to many people's opinion, authors are usually smart, educated people who actually have many options besides writing.
(And yes, with my previous hobbies, the people that were driving it forward and producing new goods left to do something that could pay the mortgage and feed their kids. The stores that were stocking the merchandise died, and that was the end of anyone new in the hobby. Within years, the hobbies were moribund. But yes, in both cases, there were cheap goods as we burned through our 'capital'.)
I don't know if it's a particular American thing, but boy do you see a lot of the sentiment of "people should be willing to work for nearly free for the privilege of serving me." Well, I'm telling you there's no free lunch. If it's not worth it to you to pay for quality, then it's not worth it for anyone else to produce quality.