> I wonder if we really know yet if this is good or bad for innovation.

The top performers produce pretty much all the progress that is made in a field. From a global progress perspective, it's much more important for the top performers to advance than for the lower ones.

On the other hand for the "everyone needs a job" perspective, and "not all progress is revolutionary, you still need people to do ordinary work" you need the bottom performers to advance.

But this is not a zero sum game (as you imply). You can advance both, it's just not as many politicians care about the top performers. That's because politicians don't care about global progress, they care about bulk numbers: the majority of people need to be happy, and have incomes. And that implies helping the bottom and middle levels.