Modern Society: Have we lost the plot?

I recently learnt of primary schools in the area that actively look to not give their students (children) first place medals. Whether this be for their work, a sports day or whatever else may come by. The reasons behind this? To ensure that the other children who didn't place first do not feel inferior.

Is this the politically correct, 'we can't insult or degrade anyone in society' gone mad? I would think that a child learning the feeling and value of defeat is one of the most fundamental learning curves a child could take. The children who do not learn these essential drawbacks surely do not have a true grasp on what life is really like and the true, sometimes hefty, pitfalls it brings.

With the way the world is developing and has done in the past years, it appears it is only going to get more competitive. So, in order to be able to compete in this modern world, surely we need to expose our children to this, and not 'wrap them up in cotton wool'.

I'm not saying to go hardcore on these children. I just think modern society has it ways of doing what it thinks is right and convinces itself to that fact, when in actual fact, it is only narrowing our children's focus, vision and understanding.