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One of the crucial aspects of a functioning capitalist system (and thus the educational system within (which, in this country, does end up that way)) is a very competitive attitude, that goes beyond friendly sportmanship and into a mentality that My success depends on your failure. This example you bring up is simply reinforcing these social behaviors that are already there in society, much like most other TV shows that pit two sides in competition with each other.
I don't think it's a good thing on the whole, and I don't watch Fear Factor (never knew it went past eating cow eyeballs). But your alternative is NOT as cut and dry as "Well then you're left with communism." But politics/economics are not my specialty, so I'll leave that for someone else.
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