With competitive federalism, competing governments compete for businesses. Businesses choose to establish themselves in the jurisdiction of whichever competing government treats businesses best.
The socialists say that businesses will demand the right to abuse workers and customers. Businesses will choose to establish themselves in the jurisdiction of whichever competing government offers businesses the most opportunities to abuse workers and customers. Businesses will flee the jurisdiction of any competing government which protects the rights of workers or customers. The result will be a race to the bottom. In order to attract businesses away from other competing governments, competing governments will have to offer greater and greater opportunities for businesses to abuse workers and consumers and less and less protection for the rights of workers and consumers. Eventually businesses will be allowed to commit any crime without any punishment at all, and workers and consumers will have no rights at all.
The socialists' argument is wrong because competing governments must compete for residents. If a competing government provided unlimited priviledges to businesses and no rights for workers or consumers, then no workers or consumers would want to live there. The competing government would fail to attract residents. Business managers might fantasize about moving to that competing government, but in reality businesses would not be attracted to that competing government because there would be no workers and no customers. With no residents and no businesses, the competing government would fail.
Likewise a competing government which provides excessive rights to workers and consumers and insufficient rights to businesses would fail to attract business, and would fail to attract residents because there would be no jobs and nothing to buy.
To be succesful, a competing government must attract both residents and businesses. To attract both residents and businesses, a competing government must balance the rights of businesses, workers, and consumers. The better the balance, the more successful the competing government will be.
Competitive federalism causes competing governments to balance the rights of businesses, workers, and consumers. Competitive federalism prevents competing governments from abusing businesses, workers, or consumers. There is no better protection for the human rights of workers and everyone else than competitive federalism.
The socialists's argument that competitive federalism unfairly favors business makes no sense, unless we assume that workers and consumers are slaves, who have no freedom to choose where to live or where to work or what to buy. Without competitive federalism to protect the rights of workers and consumers, some businesses do manipulate the government and partly enslave their workers and customers. The socialists' assumption that we are all slaves is partly correct. Why are the socialists not in favor of freeing the slaves? Why are the socialists opposed to using competitive federalism to protect workers' rights? The socialists want a better slavemaster, not an end to slavery. The socialists are in favor of slavery.