So your first point is: one hand washes the other. I will show favoritism to people who can be of some benefit to me. Sounds like merit based favoritism. So for example could I show favoritism to a guy that works really hard? Is that corruption? Or I show favoritism to a guy who can invest in my company because his family has money? Is that corruption? (probably more so than the first example but I'm not sure).

The second point favoritism among the powerful is worse than the familial sort, because of your first point.

If anything it seems that the opposite is true because according to your logic the favoritism here is more merit based.