In a struggling, developing immature economy it might make some sense for government to put up some supports for certain companies or industries (Japan did it (Zaibatsu), South Korea did it (Chaebol) ) . I'd still oppose it on principle of course.
But there are real drawbacks once an economy starts to mature. Government giving guaranteed loans (or tax favors or handouts) to some corporations at the expense of tax-paying companies keeps an economy from being free and dynamic. Real competition becomes muted, who would invest in a business that will compete head to head with a government supported one.
Sometimes these favored companies will not be innovated for long, they will tend toward family-run operation for generations. Often they will stop being competitive and lose money but will still be sucking down tax dollars or government-backed loans (malinvestment).
In 2012 LG and Samsung were fined for collusion on the price of appliances. They probably thought they were bulletproof even after the Chaebol system ended.
Daewoo Group went billions into debt, probably because the government had their back. Prior to the Asian Financial Crisis of the 90's, it was the second largest Chaebol in Korea after Hyundai Group. The government finally dismantled it and much of it vanished (as they would have long before in a free market). Some parts now exist as independent companies (Daewoo Shipbuilding, for instance).
Daewoo, at the time, was one of the largest bankruptcies in history.
