A few days ago, I accused Tories of being "oblivious to problems of weak demand". Not just Tories, it seems, but the media too.

I say this because its coverage of the closure of steel works is blaming these upon, variously, Chinese dumping, high energy costs and the global slowdown.

But there's something missing from this list: fiscal austerity.

Simon has estimated that this has cost the UK economy 5% of GDP, and the euro zone a similar amount. It's reasonable to suppose that if European GDP were 5% higher then there'd be more demand for steel and so the industry would be in better shape. I'm not saying all would be well, but the odds would at least be more favourable to it and, at worst, laid-off workers would have more chance of finding new jobs.

This point, however, is being missed. Instead, we get this from business minister Anna Soubry:

The steel industry across the UK is facing very challenging economic conditions...government cannot alter these conditions."

As if government cannot influence aggregate demand! Instead, in blaming high energy costs for steel's woes, the press give the impression that greens are responsible whist the government is a powerless onlooker.

What's going on here is deeply ideological. Weak demand is being presented as something natural and immutable, rather than what it is - a policy choice. The costs of that choice, however, are not mere statistics - a few per cent of GDP - but people's livelihoods and communities.

You might think I'm making a leftist point here. Not entirely. There is in fact a free market case for high aggregate demand policies.

Such policies would fend off calls for government action to save the steel industry. This isn't because high demand would have stopped the industry slumping. Maybe it wouldn't. But if the industry were collapsing at a time of high demand it would be clearer that the industry needed to shrink in response to changing markets, and it would be easier for sacked workers to find new jobs. By contrast, state aid for specific industries is more market-unfriendly, as it risks preserving the economy in aspic and gives special favours to those who have lobbying power.

Insofar as the alternative to fiscal activism is ad hoc state intervention in particular industries, one would expect free marketeers to be most vociferous in their hostility to austerity. As I've said, the demise of small government Keynesianism is one of the oddities of our era - and, I think, a regrettable one.