The Sydney Brenner quote around the mid-point of the page captures the reality quite well, "it’s simply a regression to the mean". Or, given the typical peer review mechanisms, regression below the mean. If the original author is above average and the paper has three reviewers, any one of which can block publication, what is the likelihood that the paper will be blocked by someone less competent than the author? If reviewers are sampled at random from the scientific population (they aren't, it's usually worse) then blocking the paper is almost guaranteed to be blocked by someone less competent than the author.
A few journals are slowly moving toward a better system where publication happens first, then the reviews are published. As a scientist, I would certainly prefer to read the reviews without them blocking/delaying publication.
However, the real problem with peer review is its role in awarding grants, not in publishing papers. I have no idea how to fix that problem without introducing other problems. Too much incentive to game the system.
This argument makes no sense. Why would "less than average" referees block a paper? And why would editors select referees from the population at random? I don't know about other fields, but that's certainly not how things work in physics.
I would say it's more like a club where everyone knows each other. If you are authoring a paper you often know who the potential referees are (those that published most in the field), and you politely ask the editor to exclude referees that are in open conflict with you. Editors usually abide and you get a reasonable review of your paper.
I agree about most other issues raised about peer review in general and related incentives, but the issues raised here are not some that I recognize.
In biology (my area), it is quite frequent for reviewers to "suggest" additional analyses/experiments that reference the the reviewers work or sub-field, which delays publication and inflates citations of reviewers. Thus, some people seem to make a strategy of volunteering for review to get more citations.
My understanding is that physics has used arXiv much longer and more consistently than biology has used bioRxiv, so communication suffers less from the impact of delayed (not just blocked) publication.
Physics is a smaller research community than biology, so it is not surprising that club effects have more pronounced. Some less funded sub-fields of biology definitely have that feel (e.g., ecology and evolution), but anything remotely biomedical seems to suffer from the rando reviewer effect much more.
In my experience, the historic "squishiness" of biology and the rapid growth of NIH funding (and hence graduate students mills) leads to a larger population of less rigorous thinkers than in physics. We don't have math requirements to filter those folks out.
A few journals are slowly moving toward a better system where publication happens first, then the reviews are published. As a scientist, I would certainly prefer to read the reviews without them blocking/delaying publication.
However, the real problem with peer review is its role in awarding grants, not in publishing papers. I have no idea how to fix that problem without introducing other problems. Too much incentive to game the system.