Being first to market doesn't count then... Trade secrets still continue today and corporate espionage is at an all time high. So they still have plenty to hide which they can not patent. Before patents, or even before they existed as they do today there was plenty going on in the world and secrets were a bigger deal. Things did disappear as a result but things also leaked out.
Innovation is a meaningless word today. Mostly it is applied to things that are not true inventions but applications of inventions by others.
There are reasons to invent which will continue without patents. The significant inventions are largely outside the corporate world anyhow. They will invent ways to bring true innovations to market because a profit can still be had-- just not as much of one for as long. In some cases growth slows. But you can't really prove that current experiment is the best; it's merely a belief, an assertion.
I think most of today's patents have little to do with making the world better for the inventor's children. You also act like it's all made up of people in their garages; when it is not; also the people in low income situations are an insignificantly small proportion. Maybe there is an argument to be had from providing some dream like someday becoming a pro-sportsman but the odds of that are slim to the point of being false advertizing... but it may motivate some people so then it must be ethical right?
Some of us do things for other reasons. more mature reasons. exclusive ownership with the hope (not promise) of piles of money does not motivate everybody to the same degree. Academia is loaded with such people. Also the military has some people who are not there for the money...