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All Norwegians become crown millionaires, in oil saving landmark
- NTDF9 13y agoAm I the only one amazed at the level of foresight the Norwegian politicians are displaying here? In comparison, the US government seems so....mismanaged.
- lazyjones 13y ago> In comparison, the US government seems so....mismanaged. Pretty much all others do ... Europe is sinking in debt because politicians use it to fund the bribes given to voters to get them re-elected.
- protomyth 13y agoThis type of thing is more in the realm of US States. Alaska and North Dakota both have funds established.
- qw 13y ago30% of the population of North Dakota is of Norwegian ancestry. Not that it has anything to do with their economy. Just an interesting historical coincidence.
- cgore 13y agoPerhaps coming from a region where you can't produce any food at all for several months out of the year, and can't live without a large supply of firewood during that time too, weeds out some of the more short sighted?
- georgemcbay 13y agoThe US government is managed pretty well, by the lobbyists.
- Houshalter 13y agoI'm very confused. (Some) economists say governments going absurdly deep into debt is a good thing, and here Norway is doing the exact opposite.
- nhaehnle 13y agoSurprisingly, different economic circumstances call for different approaches. Norway is swimming in money from exported oil. Countries with balanced foreign trade need a different approach to the macro-economy.
- adventured 13y agoThe economists that say the US going deep into debt is a good thing, are simply wrong, and their theories are based on wrong economics (the very wrong economics that have been eroding the US economy for decades). Their scenarios assume low interest rates forever, which is about the dumbest notion one could ever assume in nation-state economics when a lot of debt is involved.
- vidarh 13y agoNorway has only ever been debt free on two occasions: The end of World War I (because we were neutral, and making huge profits with our huge merchant fleet) and World War II (because most of our debts were written off combined with aid). The only reason our net position currently is as good as it is, is the oil combined with the realisation that spending all that oil money would drive inflation through the roof.
- tveita 13y agoI'm not aware that any economists say that having less money is better than having more money, everything else being equal. Many economists say that austerity measures like cutting infrastructure spending and public health care hurts the economy more than it helps in the long run. You'll probably find Norway in that camp, considering their social welfare, universal health care and free higher education.
- JoeAltmaier 13y agoHesitate before drawing broad conclusions - they discovered oil in their back yard, are now rich. Not a reflection on their great foresight or thriftiness.
- sp332 13y agoTheir foresight is in saving it instead of spending it immediately. (Also in having a fund that spreads out the wealth generated by natural resources instead of letting a few people get all the money!)
- lazyjones 13y ago> Their foresight is in saving it instead of spending it immediately Not only that, but also in establishing a national oil company instead of privatizing everything to funnel profits to some large corporations. I'd like to know how they manage to prevent corruption in these areas, in Austria (where I live) it's quite common to rob the taxpayer blind and line politicians' pockets while privatizing assets.
- cobrausn 13y agoThat's no silver bullet, Pemex being the obvious counter-example. They might have done equally well (or better) with competing companies that were taxed to pay into this fund.
- jfb 13y agoIt's likely the case that Norwegian civil society would have been strong enough to produce good results regardless of the model.
- Dewie 13y ago> they discovered oil in their back yard, Yah, that's just blind luck. Would've at least shown some strategic and tactical skills if they stole it from someone else.
- angersock 13y agoIs anyone familiar with emigrating to these countries, especially if you have a tech skillset? Good idea, bad idea, horrid idea? EDIT: Let me refine that query--emigrating as an English-speaking American software engineer and tech, without dependents.
- omnibrain 13y agoMy GFs brother is a (german, studied in Germany and Spitzbergen) geophysicist and he just landet his first real job after graduating in Norway at an oil company. There seems to be a demand in this field.
- Qworg 13y agoAnecdote: A good friend of mine from my PhD program emigrated to Norway. He took his technical PhD and got a job at Google. He then moved to ARM. He's now working for a Norwegian company. He loves it.
- gizzlon 13y agoGuess it can be a good idea.. The unemployment rate is low, but there are far less jobs for people who don's speak Norwegian. Wages for programmers is lower than the U.S I believe, and it's an expensive country. In exchange for a lower pay (and higher taxes?) you get vacation, great job security and a lot of benefits. Before relocating, check if your skills are sought after :)
- coolnow 13y agoNot sure why you're being downvoted, but family in Norway always tell me there seems to be a big demand for workers in the fields of science and tech.
- larsmak 13y agoLanding a job in the tech industry in norway is no problem - especially if you are a software developer, IT-consultant, or have any kind of engineering-deegree. Currently there's a huge demand for engineers, esp. in the larger cities. Not knowing the language is not a problem at all, english is well understood and spoken. Source: Working in a multicultural software company in Oslo.
- woodchuck64 13y ago"It may also have made some Norwegians reluctant to work. "One in five people of working age receives some kind of social insurance instead of working," Doerum said, despite an official unemployment rate of 3.3 percent." 20% unemployment rate or 3.3%? Can't figure that one out.
- freehunter 13y agoUnemployment, at least in the US, refers to people who are able to work and who are also actively looking for employment. Unemployment rates don't factor in people who have completely given up on finding a job. I don't know if this is the same in Norway, but if it is, it might help explain the discrepancy.
- jackowayed 13y ago"Unemployment rate" is usually defined as (number of people looking for employment) / (number of people employed or looking for employment). So if you're not in the labor force (student, have given up looking for work, on disability, stay-at-home parent, etc), then the calculation ignores you--you count toward neither the numerator nor denominator. This came up the recent US recession because at the beginning of the "recovery," a significant portion of the drop in official unemployment rate came from people who had stopped looking for employment and resigned themselves to being out of the labor force for the time being.
- gizzlon 13y ago20% seems too high, but the difference is mostly due to people that unable or "unable" to work. They are not unemployed in the sense used here.
- luckyno13 13y agoThis is impressive. They may want to work on being a little more secretive about it. Or else we will hear of a group of extremist Norwegian terrorists forming a scary group that will kill Americans, hate god, hurt children, etc etc. which will of coarse force the US to invade. I kid, I kid, but no really, I am glad someone is getting it right.
- VladRussian2 13y ago>Still, in Norway, oil wealth may have made the state reluctant to make reforms or cut subsidies unthinkable elsewhere. Farm subsidies allow farmers, for instance, to keep dairy cows in heated barns in the Arctic. and the alternative? Milking polar bears? To compare, Canada has 1M dairy cows for 35M population, Norway - 300K for 5M population (Norway is self-sufficient milk producer and exporter of dairy products). Giving the health benefits of dairy (incl. in cold climate areas, for children and elderly) i'd say it is good investment, not "unthinkable subsidy". More on the Canada's (usually one would think of it as a pretty reasonable country) "subsidy-less" approach - http://en.wikipedia.org/wiki/Dairy_farming_in_Canada#Supply_management http://en.wikipedia.org/wiki/Dairy_farming_in_Canada#Supply_... : "Dairy farming has been subject to the system of supply management since the 1970s. It restricts the supply of milk by limiting and controlling the amount produced domestically and starkly limiting imports with high tariffs. With a restricted supply, the prices increase, increasing profits for the farmers.[4] Though this system allows the federal and provincial governments to avoid subsidizing the farmers directly, consumers instead subsidize dairy farmers in through artificially high prices paid for groceries. ... To keep supply low and prices high, it has been made deliberately difficult to become a new dairy farmer in Canada. Because the dairy industry is so lucrative, the right to own a single dairy cow is worth $28,000 (this does not include the actual price or value of the cow itself) "
- JumpCrisscross 13y ago>and the alternative? Milking polar bears? Understanding Ricardian/comparative advantage, recognising that dairy is not a matter of national security, and importing it.
- VladRussian2 13y ago>Understanding Ricardian/comparative advantage, recognising that dairy is not a matter of national security, and importing it. A country can do without uranium, it can't do without dairy. As another example of food security being a matter of national security - look what happened to Egypt 2+ years ago once wheat prices rose - for years before that Egypt was geared ("international specialization") toward fruits/strawberries/etc... production for export while becoming world's biggest wheat importer.
- jbyers 13y agoThe title is misleading. While an amazing milestone, Norwegians can't head down to their local central bank branch and draw down their share of the fund. It's a bit like saying every man, woman, and child in the United States owes $200K because of the national debt.
- Dewie 13y agoIt's a bit unreasonable to take the title literally in this case, since it would just be an absolutely horrendous way to use the money.
- angersock 13y agoIsn't that basically what many Middle-Eastern countries do, though?
- Dewie 13y agoAre they giving away most of it to the citizens? (I have heard that some countries, maybe Saudi, have things like free petrol for everyone.) And is it in one big sum, like on the order of something like 200,000USD? I can't see how the latter would work out. I can't imagine how giving most of it to the citizens would work out in the first place, but clearly I'm missing something.
- angersock 13y agoHint: who is considered a citizen?
- patmcguire 13y agoVery, very true. Brunei and Kuwait are terrible offenders - huge sections of the population (more than half in Brunei) aren't citizens and can't be, no matter how many generations they've been there. Saudi Arabia and the Gulf States also have a ton of foreign workers who aren't citizens. Saudi Arabia is second to the US in remittances sent out... http://english.alarabiya.net/en/business/economy/2013/10/27/Kingdom-world-s-second-top-remittance-sending-country.html http://english.alarabiya.net/en/business/economy/2013/10/27/... Think about big that has to be - it's more than any of the most developed EU states to the rest of the EU (how many foreign workers are in the UK? Germany? A lot. And they probably pay much better). It's more than comes out of Russia, when half the GDP of some of the ex-Soviet states is Russian remittances. So while maybe you're entitled to certain things as a citizen, a huge amount of what makes that possible is done by people who aren't.
- Kiro 13y agoWhat would happen if they started spending all the money?
- Expez 13y agoIt's not ours to spend. It belongs to future generations as much as it does ours. The money is invested and some of the yearly return on that investment is spent each year. At present the government is at liberty to spend up to 4% of the fund each year (though they don't always do this, due to risk of creating inflation, heating up the real-estate market etc). The investment fund is well-managed, but some argue that spending 4% each year might mean we're eating into the principle.
- shearnie 13y agoNot related to Norway. But when I went for a tour in the salt mine in Hallstatt it was explained that this much has been mined, this much for now, and this large amount here is for our children. In stark contrast to what I see in Australia where they'll rape the environment for short term gain and an elite few benefit.
- shirro 13y agoAustralia is an interesting contrast to Norway. Efforts to increase revenues from resources failed due to pressure from a mega rich elite. There is no equivalent fund to invest windfalls from resources. As a result once Australia's mining boom is over there will be nothing for future generations.
- quink 13y agohttp://www.abc.net.au/news/2012-09-05/rinehart-says-aussie-workers-overpaid-unproductive/4243866 http://www.abc.net.au/news/2012-09-05/rinehart-says-aussie-w... What did Australia do in response to comments like these? Elected this guy: https://newmatilda.com/2013/08/08/big-mining-lines-behind-abbott https://newmatilda.com/2013/08/08/big-mining-lines-behind-ab...
- thaumasiotes 13y ago> As a result once Australia's mining boom is over there will be nothing for future generations. South Korea was traditionally (mid-20th-century) viewed as cursed by a lack of natural resources. In this sense, it has already reached the phase of "nothing left for future generations". What's so bad about this?
- w1ntermute 13y agoThe South Korean people achieved their economic success at great personal sacrifice. I can't see the laid-back Australians being able to do the same when they run out of resources.
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- return0 13y agoI hate to be the bad guy, but they earn that money from the people who pay the price of the high oil prices. A real act of altruism is to actually do something to reduce those prices.
- scotty79 13y agoWhy would you reduce prices on finite resource?
- return0 13y agoTo counter OPEC artificially limiting supply to keep prices high.
- scotty79 13y agoStill I don't get why lower oil prices could be any good to anyone. It make gas guzzling technologies unreasonably economical, lowers necessity for technological progress and makes people burn finite resource that's needed for making a lot of 20-21 century materials.
- geoka9 13y agoThe real act of altruism is to do something to avoid burning oil at all. This way you get to be altruistic towards your posterity as well. The interesting question is, do high oil prices help this cause or not?
- toomuchtodo 13y agoUse high oil prices to invest in renewables and electric vehicle companies with your sovereign oil fund. High oil prices definitely cause people to adjust their behavior (consider EVs, use public transit,etc [demand destruction]).
- eru 13y agoOn the other hand, high oil prices also lead to more oil exploration.
- doug1001 13y agoi lived in Norway for a little over one year; for anyone who has every lived there, you become aware of the outrageously high cost of just about everything. During my time there i felt like i everything i purchased was from a New York City hotel mini-bar. The high cost is largely due to the very steep VAT (unlike the US, but like almost most everywhere else, the prices of goods in the shops include VAT) which is 25%. the cost of a private university is prohibitive for many if not most families. in addition, the personal income tax has a high lowest-rate (which i believe is 28%, and a max rate of 50%). personal accounts for frequent-flier points are taxed; the tax paid on a new car can easily exceed 85% (that's 80 + 5 not 8.5!); gasoline prices are silly--about $13 per gallon (if i did my maths correctly). i just checked a cost-of-living Site (Numbeo.com) and sure enough, Norway is #1 in Consumer Price Index with 173.85, over 22 points above second place Switzerland. How does this compare with other countries of similar oil wealth? For instance, Kuwait's oil annual oil exports are about the same as Norway's (though the lifting costs differ significantly). In Kuwait, education is free, all the way through university and there is no VAT (sales tax).
- perbu 13y agoIncome tax is not flat. It peaks at 50% (of the salary > $80K). Also education is free for everyone. Very few attend private unis.
- Dewie 13y ago> Also education is free for everyone. Very few attend private unis. Exactly. It's really misleading to readers who might be from a country where private higher education is more of the norm to just say that 'most families can not afford private universities', since most people who take higher education go to a public uni/college. And most people don't even want to go to a private university. An exception might be Handelshøyskolen BI, a college for business administration and the like. But I've never heard of the cost of that being a systemic issue.
- paulhauggis 13y ago"And most people don't even want to go to a private university." If I'm paying that much in taxes and most goods and services are really expensive..how could I afford this? I think this is probably why most people aren't going to a private school..unless you are extremely rich...which I don't think is even possible in Norway with all of the taxes currently in place.
- netman21 13y agoAustralia, in the 1980-90s established a social welfare retirement fund. It is now worth more than their GDP!
- femto 13y agoI presume you are talking about the "Superannuation Guarantee", whereby 9.25% of everyone's salary gets diverted to an account, which can't be accessed until retirement at age 60+ ? One difference between the Norwegian fund and Australia's superannuation is that superannuation accounts are personal, so people without a salary don't get any benefit. The total value of Australia's superannuation is about AUD1.7e12, about AUD74,000 per person, a bit under half the Norgegian figure. This is inequitably distributed though, with an awful lot of people (anyone that doesn't receive a wage/salary) having virtually none.
- Wordit 13y agoYep, this is a problem particularly for women, who tend to get paid less than men and take time off to care for children -- for example, half of all women aged 45 to 59 have $8,000 or less in their superannuation funds. http://www.humanrights.gov.au/publications/gender-gap-retirement-savings http://www.humanrights.gov.au/publications/gender-gap-retire...
- vidarh 13y agoAlso note that despite the name of Norway's fund, it is not in fact the "real" current pension fund. Pensions are paid from the Government Pension Fund - Norway. The sovereign wealth fund in the article is the Government Pension Fund - Global. The former is what people pay into from their taxes, and is used to directly pay pensions. The latter is currently only used sparingly.
- bdcs 13y agoThere was a great podcast by NPR's Planet Money[1] about how Norway avoided the "resource curse"[2], or paradox of the plenty, whereby countries with bountiful resources tend to be less developed than vice-verse. Highly recommended! Please comment below if you would like to discuss. [1] http://www.npr.org/blogs/money/2011/09/06/140110346/how-to-avoid-the-oil-curse http://www.npr.org/blogs/money/2011/09/06/140110346/how-to-a... [2]http://en.wikipedia.org/wiki/Resource_curse http://en.wikipedia.org/wiki/Resource_curse
- discardorama 13y agoAn interesting plot twist: an Iraqi set up Norway's Sovereign Fund ( Farouk al-Kasim ). http://pri.org/stories/2012-06-06/norways-example-oil-and-gas-boom-done-right http://pri.org/stories/2012-06-06/norways-example-oil-and-ga...
- hansjorg 13y agoFinancial Times have a very interesting article about Farouk al-Kasim, "The Iraqi who saved Norway from oil" (link requires registration, but it's free): http://www.ft.com/intl/cms/s/0/99680a04-92a0-11de-b63b-00144feabdc0.html#axzz2pz6wTL3K http://www.ft.com/intl/cms/s/0/99680a04-92a0-11de-b63b-00144...
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- lafar6502 13y agoIf they want to create a fund to save their future, why are they drilling and pumping their oil like crazy and exchanging it for world's financial junk? They should leave the oil in the earth, it would make much better investment.
- adventured 13y agoThat assumes oil remains a top energy source in the future, and that it's still widely accepted / usable in the future (that there are still very large markets for buying, selling, processing, trading, and burning it). If the global economy moves to electric vehicles - which is all but guaranteed at this point - the existing hyper scale market for oil will disappear. Speaking financially, they should drill and sell as much of it as possible as fast as possible, particularly with today's excellent prices. Leaving it in the ground is as good as destroying the wealth it represents here and now. The best conversion they could do is to build the world's best renewable energy infrastructure, and drive it to a large surplus that they can export. Build the best education system, so all of their 5 million people get top notch educations. Build the best commercial infrastructure to keep their economy competitive. Invest into robotics and really any IT and R&D, and perhaps compete in new forms of automation based high value manufacturing.
- e12e 13y agoIt seems unlikely that oil and gas wouldn't be valued for both use as energy source and for chemical processes in the future as well. With an added benefit of less oil burnt now, might decrease the chances of a cataclysmic climate event in the near future.
- adventured 13y agoIt's more likely in environmental regards, that oil and gasoline will be nearly regulated out of use in the future (if they're not simply stamped out by superior energy infrastructure). The death by regulation scenario becomes more likely as the world becomes less dependent on oil / gasoline. That's why the Obama Admin dares to hammer coal now, because natural gas has come online via fracking.
- camus2 13y agoThat's what would happen in most african countries if wealth from natural resources were managed correctly (oil,gold,uranium,...). Unfortunatly it will NEVER happen.
- naas 13y agoThey're like the dwarves of Erebor. I would be very worried if I were them, considering the fact that they're the home of the Norwegian Ridheback.
- neals 13y agoSo what are they going to do when the oil runs out?
- vidarh 13y agoGo back to living on the 80% of GDP that is not from the oil + the returns of the wealth fund.