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It is necessarily a metaphor, because we're not talking about social systems rather than thermodynamic ones.
That's very clearly not true. New identities emerge all the time. There's even a special word for it: ethnogenesis.
That doesn't seem like a problem for their thesis. They still might be wrong, but the tendency towards homogenization over time within an area doesn't threaten the idea that heterogeneity breeds innovation.
I don't really see a difference in the abstract mechanics.
Am I right to assume that ethnogenesis is a result of things being isolated from one another? If you were to split America in two, and disallow the two sides from interacting, and simulate 100 years of time, the two would grow less similar over time. They'd have different slang, different viewpoints, slightly different values, etc.
I don't think heterogeneity breeds innovation, I think that differences is a finite resource which you deplete every time you force different things to interact. You will generate innovation by using differences as your fuel, but once the fuel is been depleted, the local system will be at equlibrium, and you will need to import more differences.
Let me give you a similar example, call centers exploit the elderly, burning trust in order to generate money. As trust disappears, the ratio of people who fall for the scams will decrease. At equlibrium, either all gullible people have no money left, there are so many call centers in existence that they face hard competition between one another, or it costs more to find a new victim than one can expect to earn.
You don't seem to model the world as being finite in the same way I do. Many people seem to think that innovation and other such things are "better than zero-sum", such that things improve without bounds. That's a much more pleasant way to view the world, but I have a hard time believing that it's true
No. It can, but it doesn't have to. For two examples: "African American" is for all purposes an ethnic group that developed from the interaction of black Americans with the white Americans they lived alongside. Protestant sects splinter eight times a week (and Protestantism originally emerged from Catholic Germany and developed in parallel).
If you stretch the definition of isolation to mean any sort of inter-group barrier, including metaphorical ones separating people in close proximity, then I suppose it might be true, but that would seem to weaken your view of a monotonic trend towards homogeneity. If there's a constant churn of values and identity groups over time as people invent divisions within themselves, the nature of interaction will produce endless new varieties.
That's not a stable equilibrium, it's an arms race. Short of running out of conmen or victims (both of which seem to be functionally endless), the system will continue to evolve new attacks and defenses.
I think you're making the common mistake of "harsh truths exist" => "this is harsh, therefore this is true". We have an abundance of positive-sum interactions and an overabundance of people trapped in a zero-sum mindset generating negative sum outcomes.
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