It actually is a good argument against socialism, at least in the USA where the government is so enormously susceptible to special interest groups (although there are even better arguments against capitalism so I don't mean to say that it PROVES that socialism is bad, just that it is one example of its misuse, when the government is in charge of something and also the government is stupid; and before anyone says it, yes this situation is an argument against both at the same time:-P).

Sounds like an argument for market socialism, to me. You get a free market and employee owned and operated companies like co-ops instead of corporations run by psychopaths.