You can't have insiders unless you have outsiders.
And you can't have winners unless you have losers.
That doesn't mean that you're required to create insiders and winners. All it means is that when people begin to measure themselves only in comparison to others ("How did I rank?") then you need to accept the impact of those choices.
It's entirely possible to be happy and engaged and productive without creating this dynamic. But in a culture based on scarcity, it's often easier to award or deduct points and to keep a scoreboard instead.