First: "Sweden, for instance, has a higher startup rate than America, and less income inequality — as do a number of other countries."

To the extend it can be measured, the metric that matters isn't the number of startups ("employer enterprise birth rate" in the Sweden link). It's the net value generated by them.

Second: "Would anyone choose the second world?"

Yes, startup founders would. Because they can fix poverty with the value their startup generated.