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Economics aside, another part of the problem is that certain pedigrees and bloodlines have become dominant thanks to the highly artificial selection process imposed by the sales/commercial aspects of racing. As a result, people are buying a product (horse) that is no longer physically capable of performing the way it used to. Even if the 1980s trends placed too much emphasis on yearling sales and two year old sales, the campaigns for two year old horses back then still were more rigorous than the entire careers of many top horses today.
Then you have the "less is more" theories now employed by trainers, which doesn't build a decent foundation... but that's another ball game right there.
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