Solving the "elf superiority problem"

[sandmote]

I would deal with the problem by making my elves more powerful, and far more sociopathic. Ignore the 'nice, hippy' elves. These are the fair folk. Their weakest magic lets them match veteran mages. Their regeneration abilities lets them recover from deadly wounds in weeks. And they are very hardy, and live for very long.

Alternatively, the elves are simply to stubborn to work in large scale groups, and are to 'nice hippy,' for large scale farming or industrialization. Although note none of this specifically applies to Phoenix's specific case.