Part 1: Philosophical Reasoning
There appears to be confusion of agency here. The agent would be the system, not the person who "won" the position.
With that said, this dilemma, like most moral dilemmas, is one of scope. If we look at only a person or two, ignoring any greater group or thing, then a dilemma may present since we know someone is gaining while someone is losing. The solution may be to broaden our perspective by looking both to include more people and longer term.
This overarching phenomenon applies to a substantial set of moral and ethical dilemmas. A prominent figure in the study of moral reasoning is Lawrence Kohlberg, who identified six plus stages through which a person's breadth develops. I will attempt to list these here, along with a tip on how the scope tends to expand at each consecutive step. List from Wikipedia, with notes and emphasis by me:
Level 1 (Pre-Conventional)
- 1. Obedience and punishment orientation
This early viewpoint focuses on the will of those with power, often one's parents. One's own will is subordinate to that will.
- 2. Self-interest orientation
Here, one begins to include one's own will, at least where possible. The scope of concern is one's superiors plus oneself.
Level 2 (Conventional)
- 3. Interpersonal accord and conformity
Once society outside the home is better in view, one usually begins to include consideration for the happiness and well-being of one's peers.
- 4. Authority and social-order maintaining orientation
With further experience, a person may begin focusing on and upholding social hierarchies. Which hierarchies or authorities are recognised depends on values and group affiliations. Externally-defined social roles serve as a source of consideration in ethical matters.
Level 3 (Post-Conventional)
- 5. Social contract orientation
Consensus-based rules and expectations, whether individual agreement or broadly democratic, are now included. Reminiscent of the transition from stage one to stage two, but more abstract, something of moral self-determination begins to emerge.
- 6. Universal ethical principles
Beyond the one-off, ad-hoc focus of the previous stage, a person may begin to reason in moral abstraction, where ideas alone, not tied to any particular person, group, or role, have inherent value and perhaps agency.
[suggested by Kohlberg]
- 7. [Transcendental or Cosmic]
While generally reserved for those who have spent fair time thinking about life, ethics, and existence, at stage seven, a person begins to focus on matters, and non-matters, past the flesh. Some may look at life beyond humans, caring for the whole biosphere. Others may set their mind on the universe. Still others may prioritise immaterial, spiritual essence.
On the question of competition, if we get stuck at stage three (interpersonal accord), we may have a dilemma since both persons cannot be kept happy in the immediate term. If we move to stage five (social contract), one might argue that the participants agreed to the game, so no foul. But if that reasoning is unsatisfactory, stage six (universal principles) may come to the rescue. Here, instead of focusing on this one-off instance, we can abstract through time and say, the person may have lost this round, but may have won other rounds in significant ways that balance out overall. If we abstract beyond the individual, one could argue that having people well-positioned in the most fitting roles makes for better society that benefits everyone.
In conclusion, many dilemmas can be alleviated by using more encompassing, perhaps more abstract consideration. Even when not fully resolved, higher stages of reasoning can highlight new ways forward.
Part 2: Ethics of Emotion
The idea may sound crazy at first, but hear me out: both egoistic competitiveness and empathetic compassion are emotion-based, heuristic substitutes for moral reasoning.
When we are first born, we lack the discipline of careful logic and the depth of philosophical wisdom. Nevertheless, we must survive. So nature comes to the rescue with the emotional heuristics of ego and empathy. Their function is not to replace, but to substitute reason when experience, or when time for thought, is lacking.
As with many heuristics, careless use, or overuse, can create issues -- especially dilemmas.
In the case of ego, careless use can enable inaccurate, self-serving misjudgements. These can have far-reaching moral consequences, particularly for persons in positions of power or influence. Overuse tends to result in narcissism, which traps a person in the cycle of validation seeking, whether covertly or overtly.
In the case of empathy, careless over-reliance can result in blind harm, without remorse. The nature of empathy is to feel for those of the in-group. All it takes is for a person or group to be cast out and dehumanised, and empathy turns off for that party. If one never learns to appreciate others rationally, relying only on emotion, atrocious manipulation of this sort is possible.
In both cases, coming to learn and understand our emotions and motivations -- especially the hidden ones, lurking in the shadows of the unconscious -- is key to avoiding blind suffering. From Wikipedia:
In analytical psychology, the shadow (also known as id, shadow aspect, or shadow archetype) is either an unconscious aspect of the personality that the conscious ego does not identify in itself, or the entirety of the unconscious; [...] "Everyone carries a shadow", [Carl Jung] wrote, "and the less it is embodied in the individual's conscious life, the blacker and denser it is." It may be, in part, one's link to more primitive animal instincts, which are superseded during early childhood by the conscious mind.
Back on the topic of competition, a couple of potential ethical problems come to mind. One, careless egoism can promote dishonesty and other dirty behaviours. Two, those having less competitive spirit and perhaps more empathy are likely to find the competitive climate, even if absent of anything dirty, to be rather unpleasant. As a result, these people may have trouble finding optimum performance and enjoyment.
To support harmony, various options may be considered, with different options better fit to different environments. Here are some ways to keep the peace:
Dedicated arenas can be offered to satisfy competitive urges. Sport is one such arena.
Referees or reputation tracking can help identify and demote dirty tactics.
Counseling can be provided for those with problematic narcissism.
Group bonding activities can help promote cohesion.
Some positions can be split into egoistic and empathic versions, both equally paid.
More so than with moral dilemmas, emotional dilemmas cannot always be solved using reason alone. Accommodation, compromise, and special motivation may be in the picture.
Related reading: goal orientation; motivation.