Any time you go to a bookstore, you can see dozens of novels that have won one prize or another. One of the most coveted prizes is the Pulitzer, but there are many lesser-known prizes, too. Some are legitimate awards and others are phony cocked-up awards created to promote a magazine. And then there are the awards created by publishers for the sole purpose of feeding the ego of a favorite writer. For example, recently a group of publishers got together and created a phony award to give to Stephen King. God knows that King would never win an award based on actual talent, so these guys decided to create an award for him. Nice!
The problem with many of these awards is that they are given to mediocrities by a committee made up of literary mediocrities. For example, giving the Pulitzer to _Middlesex_ is a case in point. The author of _Middlesex_ is an accomplished mediocrity--his writing is at a high level of mediocrity--but it is, nonetheless mediocre. His character of Callie is supposed to be female, but never actually escapes from his male viewpoint.
This is a problem when you set out to reward merit, but rely on mediocrities to select merit. There is always the Scalieri Factor, where the mediocrities conspire together against the truly talented and present an award to one of their own.