There’s a difference between bailing out banks and steel

In light of Tata Steel pulling out of Port Talbot Steelworks, a number of people are calling for the nationalisation of the plant. Prime Minister David Cameron has ruled out nationalisation.

The commonest argument for nationalisation currently runs: “we bailed out the banks run by the rich, why not bailout the poorest who work at the steelworks?”.

The bank bailout was not about bailing out rich bankers. It was about bailing out the entire financial system. Without banks, every industry fails including the steelworks.

The town of Port Talbot relies heavily on the jobs that the steelworks bring. There is a legitimate argument that temporary nationalisation could facilitate purchase of the steelworks by a private buyer. As with the Longbridge plant, this is a possibility but runs the risk that in all likelihood, it merely delays the inevitable.

As a well-paid single man with no dependants living in a city (albeit one which was equally reliant on steel three decades ago), I cannot imagine what it means for the steelworks in Port Talbot to close. It will be costly to retrain steelworkers, particularly older workers for whom trying to learn new skills is challenging and getting a new job more challenging.

That is a testament to the failure of the welfare system to properly turn around those who are unemployed back into stable jobs. Even with a functioning welfare system, this would be a challenge.

Nonetheless, Port Talbot Steelworks and RBS and Northern Rock are not analogous. The failure of Port Talbot will have an appalling effect in the short- and medium-term, particularly in the local area. Nationalisation will likely not change that.

As destructive as it would be, nor however will its failure bring about the next recession or great depression.

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