Sorry Jezza, steel plants and banks aren't alike at all


It would appear that Jeremy Corbyn does not realise that one thing is not like another thing: that banks and steel works are not the same.

In a speech to Labour’s Eastern regional conference in Stevenage, Corbyn will say that the prime minister should follow the interventionist route of Gordon Brown during the banking crisis and step in to help workers. “We need Cameron and Osborne to act as decisively in 2015 as Gordon Brown did in 2008, when Labour part-nationalised RBS and Lloyds to prevent economic collapse,” Corbyn will say.

“If the Italian government can take a public stake to maintain their steel industry, so can we. That’s why Labour will be pressing Cameron to use the powers we have to intervene and, if necessary, take a strategic stake in steel – to save jobs and restructure the industry.”

Bailing out the banking system was the right thing to do, bailing out the steel industry would not be. This is not because bankers tend to come from the same background we do while steel workers are northern working class types. Rather, it's essential that a modern economy have a financial system and it's not essential that a modern economy have a domestic blast furnace or two. For it's actually impossible to have anything at all resembling a modern economy without a financial system. But as long as someone, somewhere, has a few blast furnaces then we'll be just fine, we don't actually have to have any, any more than we need to grow our own bananas, coffee or Bourdeaux domestically.

We're not entirely fans of the way that banking was bailed out, that's true enough: rather more shareholders and even banking management might have been led to the chopping block to satisfy our tastes. But that we need to have the system itself is obvious.

There is a further issue as well: imagine that there was indeed a part nationalisation leading to a restructuring of the industry. The outcome of this would be that the very same plants which are now closing would close. Simply because it is still true that a modern economy doesn't need to have so many blast furnaces hanging around. Just as one technical example, the Redcar plant imported all of its raw materials (the original location was because all could be locally resourced but that's long gone). There's little to no economic point in importing such raw materials to transform when we lose money by doing so. Especially as we can have that transformation done for us elsewhere and just import the steel.

Thus nationalisation would, if done properly, change the outcome not one whit. And if it doesn't change the outcome not one whit then the nationalisation wouldn't be being done properly. So, let's save all our money and not do the nationalisation then.