Stupid use of funds for the most part, it's not re-invested in the country, just the American stock market. It's not like they had to buy solid gold rolls royces, but there's no reinvestment internally other than oil and fish. Norway is a hedge fund with the F-35.
I suspect that the people arguing here that Norway should direct that huge volume of money internally are not Norwegian residents. Those of us who live in Norway, most of us anyway, recognize that doing that would be a disaster and would just fund short term spending and fuel inflation.
The UK and the Dutch just spent the money they got from the North Sea oil and at least the UK has little to show for it.
Anyway, the Norwegian economy is doing just fine without it, we bounced back from COVID faster than practically everywhere else and everywhere I look there are new commercial and industrial buildings going up.
There must be some way that a honest government can spend a lot of money improving a country.
The ideas that this decision can not be made in a hurry and that the spending can jump in size too quickly are reasonable. But the ones that there is absolutely nothing better to do with the money, and that most of it will be there in a large crisis when they need to withdraw are both ridiculous.
The larger your economy, the more of a financial cushion you should create and the longer your investment horizon needs to become. If you want to have a resilient society anyway. Political pressures though count against it and demagoguery can make it extremely appealing to reap short term benefits at the cost of long term investment in your own society.
It’s why I was really sad to see the Canadian government give up on its Crown corporations. Sure, they got tens of billions of dollars for it. But that wealth took a really long time to acquire in the first place and the market cap of having a complete monopoly can’t have been priced in correctly (otherwise the private market wouldn’t have been all lathered up at the opportunity to take over).
It's better than the poke in the eye, that's for sure, I just don't think it's optimal and I'm tired of the way this story gets trotted out every now and then. I think there's a middle ground between solid gold rocket cars and rainy-day austerity. Norway is quite under developed in many ways, many services you'd think would be better just aren't, once the oil gets switched off they don't have much modern industry as an alternative, which wouldn't be the problem if they spent some of the money to diversify.
> many services you'd think would be better just aren't
Perhaps you could enlighten us about which services are lacking and how they are so much better in those countries that just spent the North Sea oil revenue internally?
Posten is a mixed bag. Ease of access at places like grocery stores, and general service is great. But delivery can often be weirdly delayed. Sometimes we get notice of bills _after_ they're due. But overall, I prefer it to the US postal service I'm used to, so it doesn't feel like a slam dunk example to me.
Spend some of that money on training and paying more GPs, and you'd have my interest...
Maybe I'm just really unlucky, and I didn't really want to get into that guy about wait times at hospitals or whatever, but I find Posten to be just _spectacularly_ and often hilariously terrible.
Fair point, but why would you think that having a workable post service is a matter of money? Maybe they're simply incompetent and/or never bothered to fix it...
Using it internally would not be a good idea, though. That amount of money fueled directly into the economy would make our inflation even worse than it is.
I think this really highlights the attitude - don't invest money because it might harm the money. Money is for putting in foreign assets, so that rather than a large amount of money now, you can have a small trickle of money later.
Yeah, countries always have this, they're called taxpayers. If you invest in them, they can pay you more taxes than you put in. If you make their lives good, then people can even make _more_ people! Instead, Norway invests in American businesses in order to get that slow trickle, so instead of investing in their own people and industries, they have a slow trickle which can gives pension to a population in decline.
Maybe that's the real nub of the "resource curse"-- any effort to improve the lives of its citizens will be wrong and bad, so just invest in foreign assets and otherwise preserve things as they are.
Nasruddin was riding his donkey to the market, with his son walking along beside him.
As he passed a group of travelers going in the opposite direction, he overheard one of them saying "look at this cruel old man, riding in comfort while his son has to walk." Caring very much for the opinion of others, he got off of the donkey and told his son to ride.
He passed another group of travelers, and overheard one whisper "look at the silly old man, walking his life away while his young, strong son rides in comfort."
He tried riding behind his son, but overheard people criticizing his cruelty towards the overburdened beast. He tried having them both walk, and was criticized for not realizing that donkeys could be ridden.
Finally, in frustration, he ordered his son to help him carry the donkey. As they both struggled to lift the large and uncooperative beast, another group of travelers approached, staring at him in confusion. Before they could say anything, he shouted at them "Shut up, I don't want to hear it!"
Investment within Norway is high enough that putting more in would drive inflation, at which point you might as well be burning the money, so it's a balancing act.
And the notion that improving living conditions - Norway is already at or near the top of nearly every quality of life measure - increases fertility is directly the opposite of real life global trends.
It's too exhausting to keep going. It's essentially a religious belief here, for some backwards reason a nation of mortgage holders is fervently obsessed with keeping inflation down and making money by investing in anybody but themselves. If you point out this might not be an optimal medium term strategy, somebody will pull out a list, point at somewhere near the top and say hey, we're doing better than Sweden.
It's good. I think it could _amazing_ if some of the political orthodoxy was reexamined.
I'm all for investment, but the problem is that there isn't an arbitrary amount of resources to invest in, nor an arbitrary supply of people to do the jobs you want to pay for with that extra money.
As such, if you pour money in you will inherently drive up prices, and inflation is effectively equivalent to applying an extra tax on everyone.
The notion that you can just pour money in and improve everything works at a household level, but is just an incredibly naive view in terms of a national economy.
It's a balancing act.
At the same time Norway, like every other country in the world is heading for a demographic time bomb nobody knows how to prevent, and so holding back money to be able to pay for that without e.g. drastically cutting back pensions and the like matters. Especially given that the "oil fund" is technically a pension fund.
With respect to mortgages, home ownership in Norway is very high in part because buying a house is affordable to the average Norwegian, in part because Norway is one of only a very small number of countries to let you deduct mortgage interest from taxable income.
But make them too cheap for supply of housing to keep up and all you do is drive up the prices and you're back to square one. Another way of saying that: Housing will "never" be cheap, because if house prices drops or interest drops or salaries go up, people buy bigger/better placed houses. We're nowhere near the housing quality where enough people go "oh, my house is big enough / in the most perfect location, I won't bother moving" if they suddenly find they can afford much more.
21% of working-age population on various forms of welfare, 33% working in the public sector and a whooping 33% working in the private sector. Taxation rates among the highest in the world.
There's plenty to criticize about the Norwegian economy.
The taxation of the oil wealth is definitely a great success story, but how that money is used from year to year is very much a mixed bag. We have per-capita public expenditures approximately twice those of Sweden. Average household debt at 114% of income, third place globally. We don't build housing, same as California.
Oil money contributions to the national budget were approximately $6500 per capita in 2022, and on top of this we have a total taxation percentage on the order of 40% of income on average, if you do the honest calculation and look at all payments to the governments.
In addition we have an energy production infrastructure that's nominally almost 100% publicly owned, but now sell electricity to citizens at EU prices (~300% markup) with the surplus going into public budgets - this is additional taxation we're not talking about.
It could be worse and there are many things going right, but selling Norway as an unquestionable economic success story doesn't completely reflect reality.
