Additionally, many times innovation comes from diversity. Diversity of background. Diversity of thought. Diversity of opinions. Carefully selecting people, culture, or thoughts is a great way to cause additional stagnation.

In my opinion you are making a lot of mistakes in your logic. I think what history has shown us it's what breeds advancement and innovation is competition (and war, the ultimate competition).

Corruption and stagnation come from stability. There is a reason why humanity essentially stalled in progress for thousands of years, then in the last 200 has advanced spectacularly. With less people you didn't have as much competition so kings and queens could rule absolutely stopping all advancement even if they wanted it.

More people means more competition, means more ideas, means progress, and generally means better quality of life.

I think 'healthy competition' drives innovation. People, companies, governments get complacent and corrupt without external competition.

The problem is when competition turns to keeping the other guy down more than keeping yourself getting better.