Indeed, if the goal is maximum rate of innovation.

If the goal is to make as much money as possible, probably not (well, a faster rate of innovation would probably increase the total productivity of society more rapidly, but the people personally involved with open-source might be making less).

More a question of fewer people involved in software than software professionals making less.

I've been paid a fair amount of money to write software that I could have created just as easily in a tenth of the time with off-the-shelf FOSS software, and I'm sure I'm not alone in that. Did I make money? Yes. But I could have made just as much money, and accomplished 10 times as much if my hands hadn't been tied by proprietary preferences. (And just for the record I'm talking about entrenched legacy stuff that's still in use, not any big modern names.)

FOSS shrinks markets, but it doesn't make work less valuable. If anything it makes work more valuable.

I was thinking more of companies that sell software, rather than individual programmers. But you make a good point.

As I said, the overall productivity of society would definitely go up.