That approach is problematic for some people. The depressive pile has already been mentioned, but we also have to consider that some people are less competitive than others. Some people are teachers or nurses until the day they retire. It isn't because they don't have what it takes to be principals or hospital administrators. A good many do so because that's where they see themselves doing the most good. In other cases, it is because they enjoy what they are doing. How many times have we seen developers mention that they feel pressured to go into management or being forced out of the industry as they get older? In other cases it is because people seek a better work-life balance. I left professional life largely due to the constant encroachment of work life on my personal life, and I suspect I am not unique.

There are other things to consider. Everyone who is employed serves a purpose, else they wouldn't be employed. It doesn't matter whether they're that paper pusher who exists solely to ensure everything is documented in the remote case of legal issues or the person who spawns a company that goes on to employ thousands of people. Sure, the latter feels more meaningful than the former, but that says more about our society than anything else (e.g. the failure of people to do their job, people wilfully breaking the law, frivolous or malicious litigation). Why should one group have more success when everyone is making a contribution?

Another thing to consider: in a world of large corporations that employ hundreds or thousands of people, a disproportionate number of people are at the bottom of the hierarchy. In a world of small businesses, there is hope of rising up the ranks, inheriting or buying out the business, or of setting out on your own. In a world of large corporations, there is only so much movement you can do and the form of competition to move up may not reflect the personality of those who are qualified.