1. In America, they aren’t. The fanciest American Jews are Sefardi (cf. Shearith Israel in Manhattan).
2. In Israel, only some Sefardim are discriminated against. The people who rule Israel are secular Europeans who want Israel to be a secular version of a modern west European country (non-ethnic, non-Jewish, with “freedom from religion”). Even Sefardim who aren’t super-frum are still very Jewish, and thus are quite undesirable from a zionist perspective. Some Sefardim who have managed to give up (or appear to give up) all trace of Jewishness can make it into the Israeli elite.
3. Among frum communities, the differences are rapidly shrinking as strict Torah observance “trumps” ethnicity. Various religious practices and accents get mashed up, and many Sefardim end up learning in Ashkenazi yeshivos, and the Sefardi yeshivos have rebuilt themselves on Ashkenazi models. Based on current trends, while the Yiddish-speaking Ashkenzi may stay distinct (for linguistic reasons), strictly frum, Hebrew-phonic Ashkenzai and Sefardim are increasingly becoming indistinguishable except by nusach.