I am in City AM this morning, debating with Keynes's biographer Lord Skidelsky about whether we should have a government-run investment bank, as Nick Clegg has proposed. Skidelsky says yes:

Showing the government is willing to invest in the right project would lift business expectations, and the contracts from large projects would flow down to small and medium-sized enterprise.

I'm not convinced. If a project is so risky that the private sector won't invest in it without some kind of taxpayer guarantee, it is far too risky to spend taxpayer money on. And government has different priorities to private investors, whose main aim is to make a return — bailing out 'national' industries is a political priority, which a state investment bank would only :

Four out of five start-ups end in failure – if the private sector can’t get it right, how will the government? Inevitably, a state-run bank would be used to bail out politically sensitive projects, as was Leyland Motors in the 1970s, at a cost of £12bn to the taxpayer (inflation adjusted).

Read the whole debate. For me, the bottom line is that a project that's too risky to attract voluntary investment is the last thing that taxpayers' money should be spent on. Governments aren't very good at what they do as it is — I shudder to imagine how badly they'd do at playing the market with other people's money.