First of all, I want to preface this by saying that I do not disagree with you politically, Grumpy's political consolidation question has already been argued to death, and I'm not here for that. There are a plethora of more qualified people than me to talk about this. However, there are plenty of economic/game points you made to validate your argument that are wrong. I want to go over those.
Mikey has made some valid points, because you're generalizing economics and trying to argue that boosting nations into the upper tier/focusing your growth in the upper tier exclusively by being an individualist alliance/nation is wrong and inherently bad for the game.
I'm strictly here to point out why that argument is wrong.
Individualist ambition and growth is incredibly important to the game, on a nation level and on an alliance level. You said that "If you want to focus on building your own stuff, there's plenty of single player games for that". The reason I found this particularly interesting is because NPO players use this to argue a lot of their points.
When you're playing a multiplayer game, the main drive in the game is to become better than the people you're playing with/against, that's the whole point of putting time and effort into growing your nation. It's a competition. If you were playing a singleplayer game against AI/bots, there is no drive and competition to make you grow, you simply play until you beat the AI.
That's what a competitive market is, whether it be in terms of individual nation growth within your own alliance, or wider alliance growth across the top 20.
Now I know what you're going to say. "That wasn't the point, I was arguing about Grumpy consolidating in the upper tier and not letting the rest of the game catch up". The reason I disagree with you is because your argument is insinuating that this type of game behavior is bad, while your game behavior is good. You're inherently trying to discourage people being selfish individualists primarily growing themselves, by pointing at grumpy. It's as if you're using it as an excuse without realizing that you're including a big portion of the game. That's what I have a problem with. You may not be wrong in your political argument about large upper tier consolidation, but you're also trying to argue that being selfish is bad for the game.
The same way you argue that being selfish and individualistic is inherently bad for the game, I could just as easily make the argument that consolidating in the lower tier is the same, and just as bad, or even worse for the game. See what I mean? It's redundant to argue that playing the game one way is terrible, while playing the game another way is good.
Any multiplayer game needs certain people that want to rise above the occasion and be the largest player/community in the game. If it wasn't grumpy, it would've been someone else. The game curves naturally no matter which way you play. When/If Grumpy is gone, someone will take their place.
I agree with you on your first point. Saying that the upper tier is the only game that's relevant is inherently alienating, but again, you're insinuating that staying small is okay. It's not.
You are dismissing that attitude on face value, as if they're greedy hacks that want to put the small man down. When looking at players that play for years that put a big portion of their life into the game, you want to do the same, you want to be like them. My opinion always was and will be that it stimulates growth. Alex has gone above and beyond to make changes that help newer players catch up to the old guards, which is never more true than now where you can literally knock on the door of a bank and get boosted up to 20 cities in a few months. There is no shortage of capital anymore, nothing is stopping you. Taking that into consideration, you could see why their attitude has changed. It's simply true that today, anybody can become a high tier nation, and if you want to have individual power and influence over game mechanics, your natural instinct tells you that you need to grow your nation and become larger.
If you're talking about protectorates or micros, micros that are alienated by larger alliances/nations ARE irrelevant to the game, because micros are shit stained piles that contribute nothing. They recycle leadership until they die. If you want to contribute to the game, you need to join up a larger alliance that will grow you up, be that NPO that will grow you to mid tier or Guardian that will grow you to upper tier. In an ideal world, we would encourage players to grow their nations into the mid-high tier instead of telling them that running shitty leadership and staying small is okay.
Again, your first point holds great value and I agree with it. Recruiting alliances that put great effort into consistently recruiting, educating and growing the new playerbase are great for the game. However, you're insinuating again in your second point. First of all, giving money to micros is far worse than keeping it for themselves, micros need to die and go through the food chain of quitting their alliance and joining an established top 30 alliance. Second of all, whales already do that. Whales invest in banks and banks invest in low tier-mid tier players. To insinuate that whales these days sit on billions and never circulate it around the economy is simply false. I've built close to 50 cities in low-mid tier nations in the past month with nothing but whale money.