Do you spend more time in second or in last?

An irrelevant question, but naturally I'm in second more.

Now answer my question! Explain how it's fair n balanced that better positions get better items and worse positions get worse items.

You're misrepresenting the case. There is an increased possibility that better positions will get better items and worse positions get worse items. This makes it more fun for the better players and somewhat removes the crutch you would get for playing poorly. In the main it plays like it always did, but more dynamic now, which is more fun (at least to me).

Wrongly assuming the better players are always in the better positions. Again all it does is simplify the game to whoever's in front post first item box most likely wins while everyone else get's combo'd whenever they try a comeback. That's just boring and goes against what makes Mario Kart awesome.

Item balance is fine how it is in my book.