Everything was handled the wrong way
Just finished the movie and loved it, but never saw Joshua as evil or even a bad child. The psychologist was right, in her own way. Joshua was abused. His parents seemed to be disconnected from him through the entire movie. They acted much different with the baby, and though the father made an effort, his efforts seemed shallow and forced.
The part that really made me sympathize with Josh was when his father started getting paranoid. He suspected Joshua of all of these horrible things (though Josh probably did them all), but he never talked to him, never took him to a doctor, and when Joshua was crying after his dad announced he was sending him "far away", it didn't seem like pretend tears. It genuinely seemed like Joshua was crushed. He was abused emotionally for sure, and if he were to grow up to be a demented man, I would definitely blame the parents for their lack of empathy simply because he was a hard-to-handle baby.