The Observer editorial this morning says:
Nonetheless, Corbyn is in the classic post-credit crunch bind: common ownership of rail, as with health, housing and energy, is a common good. But he will struggle to pay for it.
Network Rail’s undoubted achievements have left a towering mountain of debt: more than £40bn. It has to be reduced, and it would be dangerous to add to it at the rate seen over the past decade.
Labour, punished by voters last time round for failing to restore trust lost over deficit spending, will struggle to make an argument for pumping more cash into the railways.
Billions of pounds of state funding has been pumped into Network Rail, through grants and debt, with a noticeable improvement in services as a result.
Any train operator pointing to increased passenger numbers, improved punctuality and a sea-change in safety since 2000 should be thanking, therefore, the taxpayer, not the private sector. Private operators run branded carriages while a nationally owned business does the hard work.
In other words, the Observer thinks three things.
The first is that government spending on railways has worked better than anything the private sector has done.
But, however, the resulting debt is unaffordable.
And as a result it thinks we should continue to pay the private sector £222 million a year in dividends through rail subsidies when this is enough to fund the current borrowing cost on £20 billion or so of government borrowing for investment in the rial network, which is way beyond anything the private sector will do.
And remember this £222 million is paid out after the rail franchise companies have already deducted their costs of train leasing, which are exorbitant because the government could fund rail rolling stock investment so much more cheaply than the private sector. Or to put it another way, another subsidy is already implicitly hidden in these numbers, meaning that the private sector return is likely to be much higher than £222 million.
The logic the Observer use is in that case just wrong.
The ability to fund new state investment in the rail network already exists based on the above logic.
And the Observer is wrong to say that the cost of nationalising the railways should be borne by the railways: that's a cost to the state which it just so happens could be covered by QE right now, totally costlessly.
In which case the actual argument that the Observer has left is this:
A Labour party under Corbyn would not be expected to take sides against the rail unions, which locks off a further option for getting fares down and funding new carriages.
Or to put it another way the Observer is anti-union bashing when the union in question is raising what many think to be entirely appropriate safety questions.
Shame on it, I say, for its economic incompetence and its anti-union and anti-safety sentiments.
To say that whoever wrote this editorial is stuck in a neoliberal tie-warp is to be kind to them: however looked at these arguments are just wrong.