It's easy to equate the underlying premise of the Pokemon world to real-world animal-fighting, but that's a gross oversimplification. Let's look at the big picture here.

Let's get the animal cruelty thing (a serious concern, to be sure) out of the way first: Pokemon aren't like animals. They seem to genuinely enjoy fighting. And it would appear that they don't have to obey their human masters, as evidenced by the fact that those at higher levels will ignore you unless you impress them with trainer badges. Also, the odds of them receiving any real harm from fighting are negligible: Consider that even if Arceus (the Pokemon equivalent of God, more or less), at level 100, were to hit your level 1 Caterpie with its most powerful attack, worst case scenario, your Caterpie gets knocked out. This is a world in which God finds killing a caterpillar to be a major undertaking. It would seem that harm is not a concept that translates well between our world and theirs. (I'm pretty sure some Pokemon eat others according to the Pokedex entries, but apparently serious injury isn't an issue when it comes to fighting, for whatever reason.) Furthermore, hunting Pokemon or otherwise hurting them seems to be a pretty universal taboo (with the exception that it seems to be okay to fish) in this world, as does destruction of the environment, so they don't have to face most of the problems humans pose to animals in our world.

As for the benefits, they are tremendous.

Medicine: In the Pokemon world, they have a device that you can just lay things on and it will instantly heal them to perfect health. These machines require no resources to function and are so abundant that literally every town, even down to the smallest, poorest villages, has one. And using them is free. Oh, and there are never any lines.

Government: No one ever complains about how the government works. The world is blatantly socialist, but everyone seems to be just fine with that. Poverty and homelessness are virtually unheard of, and unemployment isn't an issue because "freeloader" is apparently a perfectly legitimate and lucrative occupation. Instead of power-tripping racists with guns, their cops are friendly, helpful, attractive Asian girls who wield nothing more deadly than a baton. And while their K9 units may breathe fire, they have no interest in busting you for drugs.

Crime: Their largest, most dangerous organized crime groups rarely attempt anything that couldn't be fairly described as "hijinks." And they're too incompetent to even successfully pull their hijinks off.

Think of the children: This is a world so safe, that when your kid is ten years old, you can kick him out of the house to go battle monsters with magical powers for the rest of his life, penniless and uneducated, and know with full confidence that he'll turn out just fine and no serious harm will ever come to him.

That, my friends, is a world I'd like to live in, and I dare say, clearly a better world than our own.