Inspired by the excellent Fat Bigot and the squabbling on Question Time, I'd just like to add my two penneth worth to the argument on National Insurance.
In particular, I'd like to concentrate on the issue of "taking money out of the economy".
The Tories argue that increasing National Insurance will "take money out of the economy"
Labour argue that reducing the tax take for the government will "take money out of the economy"
They are both wrong. Before I go on, I'd just like to point out that of course I favour lower taxation and of course it promotes jobs and growth - but that isn't the point here. We're talking about what "takes money out of the economy" and the truth is that neither a NI increase or an NI reduction takes money out of the economy.
If you leave NI the same then the money stays in the economy in the form of money in the private sector (from where all money comes from) in the pockets of employers and their employees.
If you increase NI then the money still stays in the economy - it just goes to a different set of pockets. Either way, the money will remain in the British economy. You can argue that one use of the money is better than the other - but not that one way takes money out of the economy.
The only way money leaves the economy is if it leaves this nation and every year we "take money out of the economy"- billions of pounds - and hand it to the EU who graciously allow us to have a little bit of it back - but not much.
The biggest way to "take money out of the economy" is to run a trade deficit - and we've been doing this for decades. Every year 5% of our GDP is taken out of our economy in the form of the trade deficit. Even in years when our economy is growing at a decent rate this is usually over and above the level of growth by 2-3%.
In other words, even if you grow your GDP by 3% per year, you are still losing 2% of the money out of your economy. It's not like the money is lying dormant somewhere or just not being put to the best use - it has gone. For good.
When money is leaving your economy faster than wealth is being created then you have two choices. First of all, you can resort to debt - which is what we have been doing for the last 20 years to support the fallacy that was our "economic miracle". Well - we all know where that ended up.
The second choice is to print more money - which is what we've been doing for the last year or so - but that is just storing up inflation which is yet to hit us, but inevitably will.
There is a third option. You can reduce your trade deficit or, even better, run a trade surplus. However, that requires some sort of commitment to protect and preserve your national industries - particularly manufacturing.
But no one wants to do that.
They will - eventually.