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Norway is a very lovely country but I doubt there's a sustainable model there for the rest of the world to follow, since we all can't become the world's third-l

Norway is a very lovely country but I doubt there's a sustainable model there for the rest of the world to follow, since we all can't become the world's third-largest exporter of oil.

mike-cardwell 16y ago
It depends which model you're looking at. Fair wealth distribution is a sustainable model. If Norway behaved like the US, most of the money from oil would probably go to a small handful of privileged people.
- gyardley 16y ago
  I've always operated under the assumption that equal wealth distribution ('fair' is a loaded word) has an economic cost, since inequalities in wealth (+ economic freedom) encourage economy-expanding activities like entrepreneurship. Therefore I've assumed that relatively equal wealth distribution is only sustainable when there's a whole lot of wealth to go around. I could be wrong, though. Can anyone come up with an example of voluntary equal wealth distribution in a country relatively lacking in resources? (I say 'voluntary' because in poorer countries this sort of scheme has usually been enforced by dictatorships.)
  - leot 16y ago
    My version: I've always operated under the assumption that unequal wealth distribution ('fair' is a loaded word) has an economic cost, since equalities in wealth (+ economic freedom) encourage economy-expanding activities like entrepreneurship. [removed the last point as it is fair one on its own, but is not entailed from the previous statements.] I could be wrong, though. Can anyone come up with an example of voluntary equal wealth distribution in a country relatively lacking in resources? There is a game-theoretic problem with voluntary wealth distribution. I'm happy to give up my income if all my peers do, but I'm really not inclined to do this if my peers don't. Anyhow, the Anglo idea-sphere seems to have a glut of free-market-is-the-best notions, and a vacuum where the counter-arguments lie. Here's one, for you, then: if there is more equal wealth distribution, then more people have more money (by definition), which almost always means that more people are better educated and have more economic opportunity. This means more people are free to invent stuff, to start businesses, and to generally innovate. It takes a particular level of education and economic opportunity to have the human capacity to support an Apple or a Google -- a level of education that is possessed by, conservatively, less than 20% of the population. Much of the American population is simply not equipped, by age 16, to have said opportunity. Imagine, then, what might happen if we doubled the size the base of people that could start/support an Apple or a Google -- wouldn't this lead to higher GDP and overall wealth? The parent's inequality=economically-good assumes that the population's entrepreneurial spirit is static, and not affected by means or opportunity (while, granted, one can succeed in spite of a lack of opportunity, it does not follow that added opportunity will not encourage entrepreneurship or innovation). My contention, thus, is: more equality ==> a greater number of empowered people ==> more and better businesses and economic activity ==> more wealth.
    - gyardley 16y ago
      This is a plausible argument I haven't looked at before - thanks! Going to dig into this one this weekend. I wonder if we could construct a decent model incorporating education level, economic freedom, income level, income equality, and entrepreneurship.
      - leot 16y ago
        I'd be very interested in hearing about what you turn up. I've been playing around with this idea as part of a prolonged debate I've had with a friend of mine over the purported benefits of inequality. His claim was essentially that it takes an obscenely wealthy patron to create a Mozart and outsized rewards to provide sufficient motivation. Presumably the first thing to figure out is what affects an individual economic agent's long-term output. There are definitely a lot of factors. Here are some off the top of my head, fwtw: - capital available - education level - area of interest - availability of good mentorship - intrinsic emotional/psychological motivating force of income inequality (this is what you referred to earlier) - individual's exposure to "culture" of innovation/productivity
    - HeyLaughingBoy 16y ago
      Imagine, then, what might happen if we doubled the size the base of people that could start/support an Apple or a Google On the face of it: yes, it would lead to higher GDP. BUT you have to consider where that wealth to spread around came from in the first place. If I know that by becoming very wealthy I'm going to be taxed to kingdom come so my wealth can be "fairly distributed" then I don't have much of an incentive to become wealthy. Why would I, when I'd just end up back where I started? Allow me the opportunity to become wealthy and let me retain control of my wealth and then I'm just limited by personal circumstance and ambition.
      - leot 16y ago
        You're making it sound like the work won't pay. It will, just less. Care to quantify "kingdom come"? This argument is effectively: "I will work my arse off if the tax rate is 5%, but not if the tax rate is, say, 45%. It's only worth it if I can become hyper-rich; super-rich just isn't good enough for me." Where is the evidence that increasing income/wealth taxes from, say, 20% to 40% causes people to work less hard? And where is the evidence that, even if this were true, it outweighs the other economic benefits of wealth redistribution?
arethuza 16y ago
I think Norway is interesting because they have such a narrow distribution of wealth even though they have vast riches from oil, not because of those riches. Edit: The Norwegian Sovereign Wealth Fund apparently owns 1% of global equities! http://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway http://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norw...
- gyardley 16y ago
  Well, if I remember correctly (I'm no expert on recent Norwegian history), Norway had a tradition of social democracy for a couple of decades before it discovered its oil reserves. I suspect they also had a high degree of income equality, even back then. I'm only arguing that today their social democracy continues to do well - and isn't under the same pressure of other European states' - because of their wealth.
  - maxawaytoolong 16y ago
    Norway was also one of, if not the poorest country in Europe until the oil boom. They did indeed have a high degree of income equality - nobody had any money. Culturally, this, along with the harsh environment meant that Norwegians already had learned to live collectively and save whatever they had.
masklinn 16y ago
Except most of the oil-riches are stashed away, not spent as it is in Saudi Arabia.
MC27 16y ago
Norway is similar to the UK in a way, they both had lots of oil and natural gas reserves in the '80 and '90s. The difference is Norway saved the cash to immense proportions, while the UK spent the cash and used the excess fuel to live cheaply. It is a basic difference between long term and short term thinkers being in charge. I think that's the true difference between countries like the US, UK and even those in Southern Europe, compared to other Northern European countries like Norway, Germany, Sweden etc.
varjag 16y ago
Oil production accounted for about 50% of Norway's GDP in 2002. Just saying that it's not only oil.

Norway is a very lovely country but I doubt there's a sustainable model there for the rest of the world to follow, since we all can't become the world's third-largest exporter of oil.

mike-cardwell 16y ago

It depends which model you're looking at. Fair wealth distribution is a sustainable model. If Norway behaved like the US, most of the money from oil would probably go to a small handful of privileged people.

gyardley 16y ago
I've always operated under the assumption that equal wealth distribution ('fair' is a loaded word) has an economic cost, since inequalities in wealth (+ economic freedom) encourage economy-expanding activities like entrepreneurship. Therefore I've assumed that relatively equal wealth distribution is only sustainable when there's a whole lot of wealth to go around. I could be wrong, though. Can anyone come up with an example of voluntary equal wealth distribution in a country relatively lacking in resources? (I say 'voluntary' because in poorer countries this sort of scheme has usually been enforced by dictatorships.)
- leot 16y ago
  My version: I've always operated under the assumption that unequal wealth distribution ('fair' is a loaded word) has an economic cost, since equalities in wealth (+ economic freedom) encourage economy-expanding activities like entrepreneurship. [removed the last point as it is fair one on its own, but is not entailed from the previous statements.] I could be wrong, though. Can anyone come up with an example of voluntary equal wealth distribution in a country relatively lacking in resources? There is a game-theoretic problem with voluntary wealth distribution. I'm happy to give up my income if all my peers do, but I'm really not inclined to do this if my peers don't. Anyhow, the Anglo idea-sphere seems to have a glut of free-market-is-the-best notions, and a vacuum where the counter-arguments lie. Here's one, for you, then: if there is more equal wealth distribution, then more people have more money (by definition), which almost always means that more people are better educated and have more economic opportunity. This means more people are free to invent stuff, to start businesses, and to generally innovate. It takes a particular level of education and economic opportunity to have the human capacity to support an Apple or a Google -- a level of education that is possessed by, conservatively, less than 20% of the population. Much of the American population is simply not equipped, by age 16, to have said opportunity. Imagine, then, what might happen if we doubled the size the base of people that could start/support an Apple or a Google -- wouldn't this lead to higher GDP and overall wealth? The parent's inequality=economically-good assumes that the population's entrepreneurial spirit is static, and not affected by means or opportunity (while, granted, one can succeed in spite of a lack of opportunity, it does not follow that added opportunity will not encourage entrepreneurship or innovation). My contention, thus, is: more equality ==> a greater number of empowered people ==> more and better businesses and economic activity ==> more wealth.
  - gyardley 16y ago
    This is a plausible argument I haven't looked at before - thanks! Going to dig into this one this weekend. I wonder if we could construct a decent model incorporating education level, economic freedom, income level, income equality, and entrepreneurship.
    - leot 16y ago
      I'd be very interested in hearing about what you turn up. I've been playing around with this idea as part of a prolonged debate I've had with a friend of mine over the purported benefits of inequality. His claim was essentially that it takes an obscenely wealthy patron to create a Mozart and outsized rewards to provide sufficient motivation. Presumably the first thing to figure out is what affects an individual economic agent's long-term output. There are definitely a lot of factors. Here are some off the top of my head, fwtw: - capital available - education level - area of interest - availability of good mentorship - intrinsic emotional/psychological motivating force of income inequality (this is what you referred to earlier) - individual's exposure to "culture" of innovation/productivity
  - HeyLaughingBoy 16y ago
    Imagine, then, what might happen if we doubled the size the base of people that could start/support an Apple or a Google On the face of it: yes, it would lead to higher GDP. BUT you have to consider where that wealth to spread around came from in the first place. If I know that by becoming very wealthy I'm going to be taxed to kingdom come so my wealth can be "fairly distributed" then I don't have much of an incentive to become wealthy. Why would I, when I'd just end up back where I started? Allow me the opportunity to become wealthy and let me retain control of my wealth and then I'm just limited by personal circumstance and ambition.
    - leot 16y ago
      You're making it sound like the work won't pay. It will, just less. Care to quantify "kingdom come"? This argument is effectively: "I will work my arse off if the tax rate is 5%, but not if the tax rate is, say, 45%. It's only worth it if I can become hyper-rich; super-rich just isn't good enough for me." Where is the evidence that increasing income/wealth taxes from, say, 20% to 40% causes people to work less hard? And where is the evidence that, even if this were true, it outweighs the other economic benefits of wealth redistribution?

arethuza 16y ago

I think Norway is interesting because they have such a narrow distribution of wealth even though they have vast riches from oil, not because of those riches. Edit: The Norwegian Sovereign Wealth Fund apparently owns 1% of global equities! http://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway http://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norw...

gyardley 16y ago
Well, if I remember correctly (I'm no expert on recent Norwegian history), Norway had a tradition of social democracy for a couple of decades before it discovered its oil reserves. I suspect they also had a high degree of income equality, even back then. I'm only arguing that today their social democracy continues to do well - and isn't under the same pressure of other European states' - because of their wealth.
- maxawaytoolong 16y ago
  Norway was also one of, if not the poorest country in Europe until the oil boom. They did indeed have a high degree of income equality - nobody had any money. Culturally, this, along with the harsh environment meant that Norwegians already had learned to live collectively and save whatever they had.

masklinn 16y ago

Except most of the oil-riches are stashed away, not spent as it is in Saudi Arabia.

MC27 16y ago

Norway is similar to the UK in a way, they both had lots of oil and natural gas reserves in the '80 and '90s. The difference is Norway saved the cash to immense proportions, while the UK spent the cash and used the excess fuel to live cheaply. It is a basic difference between long term and short term thinkers being in charge. I think that's the true difference between countries like the US, UK and even those in Southern Europe, compared to other Northern European countries like Norway, Germany, Sweden etc.

varjag 16y ago

Oil production accounted for about 50% of Norway's GDP in 2002. Just saying that it's not only oil.