Sounds a lot like the argument against a public USPS: put it in a position where it can't succeed and has no leverage, then point at it and say that a public model can't possibly work and that it needs to be privatized.

Privatization does essentially nothing to fix the issue of rail ownership or use. Making the service privately owned gives it no leverage to operate efficiently: that comes from regulation, which is a separate problem. The biggest difference with a privatized service is that a private service can be bullied out of existence.