I argue that this is not only not true for Free Software, but is actually more true for proprietary software.
With Free Software, independent developers apply their copyright to the software and retain all moral rights, such as the ability to be associated and recognized as a contributing author of that software. In order to protect the competitiveness of this marketplace, and thus their own ability to potentially compete as an independent software creator, they release the monopoly rights associated with copyright.
With the vast majority of proprietary software, the copyright is held by the "software manufacturer". The individual software developers get paid as "work for hire", and receive no copyright at all. With all moral rights lost, the ability to prove merit to future employers or clients is diminished and thus also is diminished their main lever for advancement in their field.
The benefits of software manufacturing to the owners of the largest companies is clear: it creates a captive audience for both creators and end-users, removing the benefits of an otherwise competitive marketplace.
The benefits to software authors and customers of Free Software based software services is much easier to make. The word "free" in Free Software is the same usage of the word "free" as in Free Market competition, and the benefits of free markets to both producers and consumers are well known. The only organizations that are harmed by free markets are monopolies and cartels, and these organizations are themselves harm to a free market economy.
I have often argued that what is good for "the middle man" (the publishers, software manufacturers, distributors) is not good for the software developers (or other creators of copyright works) or their users (or other customers, audiences).
In the english translation of a reply to Microsoft from a Congressman of the Republic of Peru, the following relevant section clarifies related points.
You continue by observing that: "10. The bill demotivates the creativity of the peruvian software industry, which invoices 40 million US$/year, exports 4 million US$ (10th in ranking among non-traditional exports, more than handicrafts) and is a source of highly qualified employment. With a law that incentivates the use of open source, software programmers lose their intellectual property rights and their main source of payment."It is clear enough that nobody is forced to commercialize their code as free software. The only thing to take into account is that if it is not free software, it cannot be sold to the public sector. This is not in any case the main market for the national software industry. We covered some questions referring to the influence of the Bill on the generation of employment which would be both highly technically qualified and in better conditions for competition above, so it seems unnecessary to insist on this point.
What follows in your statement is incorrect. On the one hand, no author of free software loses his intellectual property rights, unless he expressly wishes to place his work in the public domain. The free software movement has always been very respectful of intellectual property, and has generated widespread public recognition of authors. Names like those of Richard Stallman, Linus Torvalds, Guido van Rossum, Larry Wall, Miguel de Icaza, Andrew Tridgell, Theo de Raadt, Andrea Arcangeli, Bruce Perens, Darren Reed, Alan Cox, Eric Raymond, and many others, are recognized world-wide for their contributions to the development of software that is used today by millions of people throughout the world. On the other hand, to say that the rewards for authors rights make up the main source of payment of Peruvian programmers is in any case a guess, in particular since there is no proof to this effect, nor a demonstration of how the use of free software by the State would influence these payments.