> government should be as small as possible.

Government should represent the people. To make it as small as possible just makes the voice of the people the smaller possible.

> They have no business being employers, owning property etc.

What is owned by the state is owned by all citizens. A state that owns nothing is a poor state that needs to borrow money and eventually default and fail.

> more often then not nationalized industries are terribly run

That is not true. Many countries have national corporations that run better and give better services that for profit ones. Look at the USA education system as an example of for-profit failing. The countries that run national corporations badly, are the countries that just plainly run badly, and are corrupt. Their private sector is no better that their public one.