I want to add some thoughts of my own:
The community has been having this argument since at least the early 2000s, maybe longer. We occasionally worried about it when I was a Strange Horizons editor—we wondered whether most of our readers were writers.
But here’s one thing that I’m not seeing Neil and other editors pointing out in the latest outbreak of the argument:
In sf, there isn’t that strong a dividing line between writers and readers. Most sf writers are readers, and many readers are writers.
The underlying idea of the argument that Neil and others are trying to rebut is more specifically that the readership of a given magazine consists mostly of writers who want to get published there and who think that they have a better chance if they subscribe to or read the magazine; and Neil does a fine job of rebutting that idea.
But I think it’s also worth noting that the sf world has never cleanly divided into neat categories of “reader” and “writer” (many pro sf writers have always come from the ranks of fandom). And I suspect that that category division may be even less clear in these days of (for example) widespread self-publishing, and high-profile fanfic-publishing platforms.
(Another aspect of this issue: Neil notes that Clarkesworld has received submissions from nearly 70,000 different authors. That’s a whole lot of people! Even if the magazine’s audience consisted entirely of writers who submit to it, that would be an audience of 70,000 people.)
I get that there’s also a fear of insularity here, of publishing material that’s only of interest to other people inside a small circle; but I think the circle in question is far more permeable and fuzzy-edged than some people are trying to imply it is.
(One could wander off from there into discussions about whether sf in general is too insular, and how to make it more welcoming to new readers; but I feel like that’s a tangent, and anyway I think that discussion requires more nuance than I’m up for right now.)
…I feel like it’s also worth noting in passing that part of the subtext of this all-the-readers-are-writers argument is often that people who make that claim are objecting to what the magazines publish, often on political grounds. In other words, I think that the real underlying claim is often something like “what real readers really want is manly fiction about white guys having space adventures and shooting bad guys, just like in the good old days, and the magazines are getting away with publishing that awful woke stuff only because real readers don’t read the magazines.” I see no reason to pay attention to claims like that.