In the early days of college, I used to wonder (rather I still wonder!) about this phenomenon. However good, strong or competitive people may be at anything for any level higher to their current level of action, but they get hurt most when someone at their current level of competition beats them. I will try to use a small exercise to illustrate what I mean: try to recall of one activity in which you were really strong in high school and you continued it later also and managed to reach heights which were far bigger than what others in your high school thought you would ever be able to achieve.
Now recall your strongest competitor back from high school in the same activity. It may have happened many or at least some times that due to any reason whatsoever, this other person would have beaten you. Each time this happened, your heart would have burnt to ashes in a second and the next few days were hell :-) Remember how hard it was then to accept that you lost to such a sucker :D Now it doesn't matter but just try to think what or who matters to you now? :-) I am yet to find someone who is able to separate her/himself from the present competition they face. It is the present and the competitors in the neighborhood or physical proximity which makes the adrenaline rush when you are competing, and if it doesn't then you are not in a competition. Either you are a sure winner or you have already accepted that you can't win. But we never get bothered by the far better or stronger competitors whom we know but with whom we are not competing at that point of time, though we will definitely hate them or feel jealous of them when in future we are running the race with them .
The point here is, it is primarily the local competition which drives your growth. It holds true for organizations, groups and countries or any other form of an entity as well. Constructive competition has always been local in time and location. You will find this point being emphasized by many smart people in the history. In fact, in the recent times when one of the most famous business thinkers, Prof. Michael Porter of Harvard had proposed his claim to fame theories on competition, he used this phenomenon a lot. I have read his work in the field of economic development where he just took the same concepts to a higher or macro scale. He says that very strong domestic competition in an industry for a country has historically been the pre-cursor to that country's global dominance in that industry. He also says that we will always observe some very adverse conditions and some pre-existing strengths or support structures which make this path to global dominance possible. So in a nutshell, adverse conditions and pre-existing support structures make the local competition fierce and hence competitors very strong in the long run.
So coming to the level of our everyday life, however bad things people say about the dark human emotions like jealousy and anger (for revenge), smart people have been able to use these to their advantage and win the game. How sustainable this method could be in the long run is really debatable (I personally don't believe it is very sustainable in the long run) but in the short run it is definitely the way to follow, if one wants to progress or grow. I guess if we just take this debate to a very high level then we can say that it is the classic debate about capitalism or socialism :-) So I obviously am a non-existent speck of dust in front of the intellectual giants who are advocating both sides of this big debate. But I do believe that wherever healthy and fair competition exists, it definitely is the engine of growth. Also we should not forget that when the gap between the strength of competitors is very large then it never remains a fair competition unless the strongest is a benevolent person/entity/country.
Again, I still wonder why it so happens that we are always jealous of the person running next to us in the race. Is there something which nature wants to tell us through this?
By the way, an interesting aspect of internet which is worth another posting is how it changes these fundamental or natural law of competition :-)