There was no consideration for their sellers, a large number of which cannot do free shipping. Etsy want to be "Etsy" not a platform and service for sellers.
Sure some stores won't be affected but plenty had already tried free shipping and reported it did not work, Etsy didn't care. Anyone shipping heavy items or internationally can't do free shipping properly. I know UK stores who have been told to just offer a code and discount back some of the value to their UK customers so that these stores can sell with free shipping in the US. It doesn't make sense. This is a pure revenue driver, it does not benefit stores.
Etsy do not know how to run small businesses and they are forcing people who do to make bad decisions.
You could have offered free shipping anyway if you had wanted to.