Call Me a Dreamer

I knew there was a reason, beyond simple pique, that I disliked seeing genre fiction being marketed as mainstream or literary fiction. Now Kit Whitfield, discussing Saki and Angela Carter's writings about werewolves, in her article "The Story of the Werewolf" in the farewell issue of The Journal of Mythic Arts explains why this is a bad thing for genre fiction.

Saki and Carter are too good to fiddle around with — they stand alone, and elaborating on them seems rather pointless. Besides this, they have both managed the trick we sometimes witness in non–mainstream writing: an author writes a story, in a certain genre, and produces something so well–crafted and intelligent that people end up not thinking of it as a member of that genre at all, but rather as a literary work, which happens to include elements of a particular genre but, as it were, rises above them. Write a good enough genre story, and it doesn't get considered genre. It's a self–perpetuating trend, because if all the best works get officially sublimated out of, say, the horror category, then what's left are the less advanced works, and any author who writes another good horror story will be likewise sublimated out of a kind of critical courtesy, so as not to confound him with the works that have officially failed to transcend their genre and remain just plain horror, romance, or whatever. With all the best examples labelled [sic] as something else, a genre's reputation sinks, ambitious and innovative writers start to avoid it, and it remains publicly perceived as trashy, even when there's no artistic reason why it should be.

What do you think? Is it bad for genre fiction when all the best works are labeled something else? Or does it help the status of the genre to have works that might otherwise be categorized as genre fiction be labeled as literary fiction?