It's not a single stupid ribbon. It's growing up in a society where literally every competition results in everyone winning. Predicting performance (i.e. evaluating merit) is a skill that requires development, yet when you reward everyone equally regardless of success or failure you train that skill on noise. How do you expect children to learn to recognize when people are or are not skilled when you imply that skills don't matter because everyone wins anyway? Instead you raise them to believe that skills don't matter.
What happens when these children become adults after a lifetime of being taught that everyone is a winner, regardless of performance? Cognitive dissonance and a sense of entitlement, because there will always be true winners and losers in a world of scarce resources.
Children need to experience failure. Just like they need to experience pain and a multitude of other negative emotions that our modern society increasingly attempts to shield them from. Otherwise you raise a generation of childminded adults who fail to differentiate between charisma and merit, and all of society suffers.