User blog comment:Hippogriff12/The Scarcity of Racists in Skyrim/@comment-1840877-20120727084921/@comment-1204081-20120731145920

I blame the destruction of the Heart of Lorkhan myself. After it was gone, the Tribunal fell, and people realized that if they could fall, so could the Emperor. Not that they hadn't tried before, but now they knew it was possible - and they succeeded in taking out every member of the family except for one unknown illegitimate offspring in a single day...who then later gave his all to save the world, but pretty much doomed the Empire as it was.

The dwindling racial/species bonuses could be from a slow decline due to lack of Lorkhanian radiation, some unsettling generic depression from a lack of dragonblooded leadership in the world, or some sort of generic thinning of the bloodlines from interbreeding or Oblivion-related activity.

Or make up your own reasons. I'm a gamer, not a loremaster.