Even with agricultural subsidies, the food is still grown and supplied by businesses and not the government. Kyllo was arguing that any businesses which are so essential as to justify the government intervening - as it does with agricultural subsidies - should be part of the government and not private businesses at all.
Yes, either they should be part of the government, or they should have to actually compete on the free market without government protection.
I detest monopolies that are propped up and protected by government subsidies and regulations. The people who run such businesses are enriching themselves through rent-seeking behavior at the public's expense, and then taking bailouts when they can't make a profit, all under false pretenses like "stability," quality control, and regulatory compliance, which are really just protectionism. They enjoy this privilege because they have well-placed friends in the government, thanks to lobbying and campaign contributions. It is a form of corruption.
If a business is too big or too essential to fail, it should be a function of the government, so that there is public oversight/accountability and no rent-seeking at consumers' expense. Otherwise, it needs to be allowed to fail and be replaced by competitors, if it is not financially viable. If such a business is allowed to fail and is not replaced by a competitor, it was probably not that "essential" after all.
