It's bad because "ability to use social connections" is not going to cure any diseases or solve any hard technical problems and make the world a better place for everyone.
It's basically corruption, and corruption often leads to bad things. Really the only reason it's remotely acceptable is that the money donated by the parents of these kids is partly why the college is so good to begin with, and many people do benefit from that.
The other thing is that one of the main criticisms of affirmative action revolves around the example of the poor white boy who didn't get into the school he wanted because a lesser qualified minority got preference. "Reverse discrimination!" People cry.
... where "utilize social connections best" is defined as "being born into the right family." I see your point.
You don't see how perpetuating a class-based system can be harmful to society at large in the long run?
Nepotism and corruption may be rampant, but that doesn't mean it's the way things ought to be.
People seem to think the smartest people academically should succeed but it is those people who utilize social connections best that succeed. Hence the pointy hair boss.