Well, let’s take Xunzi’s argument one step at a time. I don’t agree with it completely, but I think that it lays a fine foundation.
So, first we need to know human beings and their capacity for good and bad actions. On this matter, Confucius said that, “All men are born alike. It is through repeated action that they diverge.” Couple this with the fact that neither Yao nor Shun allowed their sons to become Emperors and when Yu’s son did become Emperor and found a dynasty, the Mandate was eventually lost and the later rulers became quite base. If the descendents of a moral paragon like Yu can become evil, we clearly see that good genes are insufficient to create a good person.
So far, all we’ve established is a neutral ‘tabula rasa’ view on human nature. So, let’s see where Xunzi takes it.
First off, let’s look at the thesis: Human nature is bad, xing e. Now, much like the English word ‘bad’, ‘e’ contains both a moral and an aesthetic dimentsion. Indeed, even the radical ‘ya’ present in the character means ‘deformed’. So, while a translation of ‘Human nature is ugly’ is not precisely correct, in this case it is fair and I will explain why.
Later in the same essay that I posted an exerpt from, Xunzi says, “All men in the world, past and present, agree in defining goodness as that which is upright, reasonable, and orderly, and evil (e) as that which is prejudiced, irresponsible, and chaotic. That is the distinction between good and evil.” So, here we clearly have an aesthetic view on that which is good and that which is bad in humans.
To continue, he states," Now suppose that man’s nature was in fact intrinsically upright, reasonable and orderly – then what need would there be for sage kings and ritual principles? . . . Now let someone try doing away with the authority of the ruler, ignoring the transforming power of ritual principles, rejecting the order that comes from laws and standards, and dispening with the restrictive power of punishments (remember, zheng=zheng: To govern is to correct), and then watch and see how the people of the world treat each other. He will find that the powerful impose upon the weak and rob them, the many terrorize the few and extort from them, and in no time the whole world will be given up to chaos and mutual destruction. It is obvious from this, then, that man’s nature is evil, and that his goodness is the result of conscious activity."
As a pre-emptive reply to some of your Daoist critizisms, may I quote the following:
Those who maintain that the nature is good and praise and approve whatever has not departed from the original simplicity and naivete of the child. That is, they consider that beauty belongs to the original simplicity and naivete and goodness to the original mind in the same way that clear sight is inseparable from the eye and keen hearing from the ear. Hence, they maintain that [the nature possesses goodness] in the same way that the eye possesses clear vision or the ear keenness of hearing. Now it is the nature of man that when he is hungry he will desire satisfaction, when he is cold he will desire warmth, and when he is weary he will desire rest. This is his emotional nature. And yet a man, although he is hungry, will not dare to be the first to eat if he is in the presence of his elders, because he knows that he should yield to them, and although he is weary, he will not dare to demand rest because he knows that he shold relieve others of the burden of labour. For a son to yield to his father or a yonger brother to yield to his elder brother, for a son to relieve his father of work or a younger brother to relieve his elder brother – acts such as these are all contrary to man’s nature and run counter to his emotions. And yet they represent the way of filial piety and the proper forms enjoined by ritual principles. Hence, if men follow their emotional nature, there will be no courtesty or humility; courtesy and humility in fact run counter to man’s emotional nature. From this it is obvious then, that man’s nature is evil, and that his goodness is the result of conscious activity."
All translations from Xunzi are from Burton Watson, those from Confucius are paraphrased from memory.
I say lock “em” up and throw away the key to prevent them from further victimizing another child. 
Both have their strengths and weaknesses at the societal level. Ultimately, I’m convinced that a benevolent society must come from the spontaneous empathetic nature of the individual, and that any and all systems of social order must finally rely on coercion to be effective.