Any system followed blindly and rigorously, whether it be phonics, Capitalism or Socialism, is almost guaranteed to fail. There's nothing new about phonics..It was around in the 1930's when I learned to read. It was rejected in favor of word recognition when people noticed that there was an inordinate number of semi-literates who had to mouth out syllables in order to read a book. Word recognition as a single system failed because too many students couldn't deal with words they hadn't previously seen and recognized.
    Effective education in reading makes use of both techniques--applied judiciously by (hopefully) good teachers.