I don't think society is (or should) based solely on competition. Society is also built on mutually beneficial cooperation. Most modern countries give money to the poor so that they can spend it, which benefits society as a whole.

The idea of winners and losers comes from social darwinism, which is just another justification for people to keep wealth to themselves and not pay taxes "because it helps the weak".

The reality is that we truly don't know what motivates people to work or to innovate. That's why equality (not egalitarianism) is important.

> Getting lazy because of a win or quitting because of a loss will severely impact someone for their entire life.

Well if you look into society, that happens all the time. And even when it doesn't happen, people still put social filters on each others because of that belief. It's becoming a club of people which believe in "strong motivation".

> I think it is important to have competition early and often in life because learning how to win and lose is an important life lesson.

What kind of life lesson is that ? On what sort philosophy does it stand on? That sounds like a motivational religion.