Because so few books seem to be taken from the slush pile, and even form rejections can sometimes take months to be dispatched, frustrated writers often claim that publishing is somehow broken. They feel that as publishing is not working for them, it can’t be working at all.
The problem lies not with publishing, but with these writers’ views of it.
Publishing is a business, and publishers have responsibilities to their shareholders to run their businesses as profitably as possible (which is why reputable publishers court their potential readers, while vanity presses court their potential writers—they’re both intent on seducing their primary customers into spending a nice chunk of cash). That means they have to publish books with a good potential for turning a profit: which means the books which aren’t going to need too much work to turn them into decent sellers. And this means that not all writers are going to be good enough to make the grade.
Mainstream publishing isn’t broken: it has its flaws, certainly, but it still works. It still publishes books which show clear commercial potential; works to make those books as good as they can possibly be; and then gets those books into as many sales points as it possibly can. Just because it does that by only publishing the very best books from the very best writers, and consequently rejecting the majority, doesn’t mean that it’s broken: just that far too many writers are not yet good enough at their craft for publishers to risk investing their money in them.