All Norwegians become crown millionaires, in oil saving landmark

http://www.reuters.com/article/2014/01/08/us-norway-millionaires-idUSBREA0710U20140108

by ibsathish • 13 years ago

98 199 13 years ago

reuters.com

NTDF9• 13 years ago

Am I the only one amazed at the level of foresight the Norwegian politicians are displaying here?

In comparison, the US government seems so....mismanaged.

lazyjones2• 13 years 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.

angersock4• 13 years ago

Well, for various values of working, the system appears to be working!

igravious• 13 years ago

Parts of Europe are sinking in debt. Norway, after all, is a European nation state.

protomyth• 13 years ago

This type of thing is more in the realm of US States. Alaska and North Dakota both have funds established.

qw4• 13 years ago

30% 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.

georgemcbay• 13 years ago

The US government is managed pretty well, by the lobbyists.

Houshalter3• 13 years ago

I'm very confused. (Some) economists say governments going absurdly deep into debt is a good thing, and here Norway is doing the exact opposite.

nhaehnle4• 13 years ago

Surprisingly, 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.

adventured5• 13 years ago

The 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.

vidarh15• 13 years ago

Norway 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• 13 years ago

I'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• 13 years ago

Hesitate before drawing broad conclusions - they discovered oil in their back yard, are now rich. Not a reflection on their great foresight or thriftiness.

sp332• 13 years ago

Their 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!)

lazyjones2• 13 years 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.

Dewie9• 13 years 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.

angersock4• 13 years ago

Is 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.

Qworg• 13 years ago

Anecdote: 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.

gizzlon4• 13 years ago

Guess 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• 13 years ago

Not 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.

omnibrain• 13 years ago

My 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.

larsmak• 13 years ago

Landing 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.

FireBeyond• 13 years ago

I should seriously investigate this. I'd love colder climates, I have EU citizenship (though, d'oh, just remembered, Norway isn't EU...), and my GF would love to live in Europe and has Norwegian heritage (though she's a fourth generation American, so ...)

dougherty• 13 years ago

As others have already written, people with engineering degrees who speak English shouldn't have a hard time getting a job in the major cities. I work as a developer in Oslo, and know for a fact that developers are in high demand.

fredrikb• 13 years ago

I work in a norwegian (infosec) company [1] and we have hired several english (only) speaking persons to get the best talents.

Norway have quotas for people with specific skills and it is my understanding that it is not that hard to get a Visa.

I also know several other companies, e.g. Opera Software, are mostly english speaking and most large companies in Norway within Oil&Gas, and Finance have english as a corporate language.

[1] http://www.mnemonic.no/en/Andre-sprak/English/Career/Jobs-at...

abhiv• 13 years ago

The weather might be something to take into account. Personally, I wouldn't want to live in far northern countries like Norway because of the limited sunlight hours in winter. I've found that more than the temperature, it's sunlight exposure that has a strong influence on the way I feel.

Living in a country that may get a few hours of weak sunlight in winter doesn't appeal to me, no matter how high the standard of living might be otherwise.

Your personal preferences will vary, of course.

stiangrindvoll• 13 years ago

You can also look at it the other way around. In the summer, some (north) parts of Norway you will always have sun :)

nisse722• 13 years ago

When I worked in Stockholm, I had a few colleagues who preferred to take a large portion of their generous (32 day) annual holiday in february or so and go someplace warm. Working through the summer is not unpleasant: the pace is slower, the office is quiet, the evenings are long, and you could still have a week or two off.

woodchuck64• 13 years 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• 13 years ago

Unemployment, 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.

chii4• 13 years ago

that's a strange way to classify unemployment. I wonder why that is used?

jackowayed• 13 years 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.

gizzlon4• 13 years ago

20% 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.

perbu2• 13 years ago

Quite a few people choose not to work (fathers and mothers of young children) is a good example. Apart from the oil, one of the bright lights in the Norwegian economy is the fact that a really high percentage of the population is working. If the number is 20% - then that's _really_ low.

marcosdumay2• 13 years ago

The US has currently about 16% of the workforce unemployed or not looking for a job, 20% is not a lot over that and probably in line with other european countries.

(Here at Brazil that number is smaller, but not a lot either, it's usualy over 10%.)

e12e8• 13 years ago

It refers to numbers like these:

http://www.ssb.no/en/arbeid-og-lonn/statistikker/aku

Some 70% percent of the population that "should" be eglible for work are "in the work force". 3% of those, are not employed currently.

Note that such numbers are very hard to compare without proper context -- you have to have numbers for pensioners, those too sick to work etc -- to compare it. IIRC Norway's work force participation is pretty high -- so you can be shocked by the "1 in 5" number, but it's entirely unremarkable.

edit: Here are some numbers quoted by NHO "the main representative organisation for Norwegian employers" (note, employers, not employees):

https://www.nho.no/en/Business-in-Norway/Norwegian-Labour-Ma...

edit2: More relevant statistics from OECD at eg: http://stats.oecd.org/index.aspx?queryid=27359

luckyno13• 13 years ago

This 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.

VladRussian211• 13 years 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_... :

"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• 13 years ago

and the alternative? Milking polar bears?

Understanding Ricardian/comparative advantage, recognising that dairy is not a matter of national security, and importing it.

VladRussian211• 13 years 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.

throwaway_yy2Di• 13 years ago

If it were a matter of national security, it would all the better to trade. Oil is a top strategic commodity: if people had refused to rely on foreign imports, for one thing we wouldn't be in this thread since Norway would be quite poor. Continental Europe would be poor too, since they don't have oil. But at least they'd be "secure" in that poverty.

vidarh15• 13 years ago

Food security is considered a matter of national security in Norway.

Perfect timing, as Norway is currently gearing up for the celebration of 200 years since the Norwegian constitution.... which was preceded by years of famine due to a British naval blockade (Norway was dragged into the Napoleonic wars due to Denmark, so the British blockaded our ports for 5 years)

It is something that is well remembered, in particularly thanks to the poem Terje Vigen (http://en.wikipedia.org/wiki/Terje_Vigen) by Henrik Ibsen, about a man who tried to run the blockade in a rowboat to smuggle food for his starving family from Denmark, only to be imprisoned by the British and upon his release in 1814 finding his family had died.

It's a poem that is central to teaching of Norwegian literature in schools, and also often brought up in history classes, including in primary school.

Erwin• 13 years ago

Those cows and other types of food are also well-protected through insane customs fees. Thus summer, Danish cheese exported to Norway has a 277% import fee. Lamb 429%. Supposedly the new government toned things down. Norway (and Switzerland) are one of the few countries not part of EU.

VladRussian211• 13 years ago

Canada is the same (from the same link above):

"Past this amount, tariffs are exceptionally high, in the neighbourhood of 246% for cheese and over 300% for butter. "

eloff• 13 years ago

When I was a kid growing up in Canada we used to smuggle cheese across the border, because it was 4x cheaper in the US. Brought 120lbs over in one run along with computer parts and other things Canadians pay too much for.

wmf• 13 years ago

the right to own a single dairy cow is worth $28,000

Has anyone started Moober ("it's Uber for cows") to disrupt this yet?

hackbinary• 13 years ago

Just to be clear, when I lived in Canada, I never thought Canadian milk or cheese expensive, nor did I feel that "luxury" dairy products, mostly imported cheeses, where out of reach. With the ongoing problems that Britain has with their 'unregulated' dairy industry, perhaps how the Canadians are managing their dairy industry is better. Even the lack of regulation is a form of regulation.

jbyers• 13 years ago

The 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.

Dewie9• 13 years ago

It'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.

angersock4• 13 years ago

Isn't that basically what many Middle-Eastern countries do, though?

lsaferite2• 13 years ago

Sure, it's not like an individual citizen could go to his bank and withdraw the funds, but it's a national wealth and is being expressed as an amount per person.

It's the same with your $200k debt per US citizen number. The Norwegian government just happens to have $160k in an investment fund per citizen.

I'm not sure what the overall budget for Norway looks like, but I'd guess it's a bit better than the US budget.

Someone• 13 years ago

For the curious: http://www.statsbudsjettet.no/Statsbudsjettet-2014/English/.

"the structural non-oil budget deficit is estimated at NOK 135.1 billion [...] Net cash flow from petroleum activities is estimated at NOK 314 billion. [...] The consolidated surplus on the Fiscal Budget and the Government Pension Fund, including NOK 147 billion in interest and dividends, is estimated at NOK 328 billion (corresponding to 10.6 of GDP)"

I guess a percent sign is missing there. That would make the surplus 10.6% of GDP.

seanmcdirmid2• 13 years ago

It's the same with your $200k debt per US citizen number.

Not really: in a progressive system, one's share of that debt when net worth is considered is probably more like $20k, thanks to wealth disparity. And again, given equitable spending per citizen (regardless of taxes paid), they really do have about $160k per citizen in that investment fund.

adventured5• 13 years ago

Just for reference (these aren't exact, but close enough):

2013 Norway Govt expenditures: $182 billion, per person: $36,000

2013 US Govt expenditures: $3.93 trillion, per person: $13,000 ($22,000 counting local + state; I have no idea how Norway's government spending looks locally)

robbiep2• 13 years ago

Which is exactly what the article says 2 paragraphs in

merloen• 13 years ago

That would also be misleading since everyone's share of the debt is $54,537, not $200K.

nhaehnle4• 13 years ago

Actually, the debt statement is more problematic even ignoring the questionable number that you cite, because the debt is mostly just a representation of relationships between citizens and institutions within a country. If you want a reasonable comparison, you have to restrict yourself to foreign debt only.

Kiro• 13 years ago

What would happen if they started spending all the money?

Expez• 13 years ago

It'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• 13 years ago

Not 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• 13 years ago

Australia 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.

quink2• 13 years ago

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-ab...

thaumasiotes6• 13 years 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?

prawn2• 13 years ago

There could've been. Our Future Fund, if that is a reasonable equivalent to Norway's fund, stands at roughly $4k per Australian. Meagre!

mikitamikado• 13 years ago

Another wonderful example of contrary is Few People's Republic of Russia. The country is world's second oil exported yet it's economy is under recession, taxes are high, and elders get $300/month pensions.

vacri3• 13 years ago

The Australian people pilloried the government when it tried to get a fairer share of the mining dollar. The government watered down their efforts. A few years later, when the people realised that that mining wealth was being funnelled directly into private coffers, they then pilloried the government for not being harsher in the first place.

I wish people didn't have such short political memories.

The other thing to remember is that Norway doesn't have much other than oil in terms of natural resources, while Australia has a strong agricultural sector (including the most fertile rice-growing acres in all of asia). It's not an excuse, just that it is worth noting that Australia isn't so reliant on one-time resources.

chii4• 13 years ago

despite having multiple sources of natural wealth, i still feel that any natural wealth should belong to all citizens.

It's unfair that an small elite is able to squirm their way into wealth in such a manner. But that is the nature of humanity - isn't much i can do about it.

prawn2• 13 years ago

I'm Australian and read a story about this sovereign fund yesterday. It's been on my mind since. The Norwegian funds works out at roughly $200k per person. Not sure if Australia's Future Fund is a fair comparison in any way, but that is roughly $4-5k/person. Someone else has noted that superannuation works out at roughly $70k/person, but I don't think that is much of a equal to what Norway have done?

While governments here have gradually privatised various state-owned entities, Norway has built fair, national strength. StatOil is Norwegian. It's not going to play capital strike and up and leave if the political climate doesn't suit it was Rinehart threatens and mining tax opponents claim.

It amazes me that the mining tax hot potato of recent politics in Australia was ever an issue. Surely that was a great opportunity to do something similar either short term or long-term for Australia?

robbiep2• 13 years ago

Compulsory super isn't directly analogous to the sovereign wealth situation, because the government can't dip into it.however, it receives tax revenues from growth in super investments, which are now nearly 1.5 Trillon, and because most workers who will retire over the next 15 years should have enough super to live out their lives on (hopefully combined with home equity, especially if you live in a capital city), then the government doesn't have the pension demands which are bankrupting states in America.

It's not an ideal situation, much more free market, but it's one of the greatest moves by an Australian government ever in my opinion

return02• 13 years ago

I 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.

scotty792• 13 years ago

Why would you reduce prices on finite resource?

return02• 13 years ago

To counter OPEC artificially limiting supply to keep prices high.

geoka9• 13 years ago

The 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• 13 years ago

Use 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]).

Dewie9• 13 years ago

There are people who want to, at the least, not open up any more petroleum reserves. The problem, which many are worried about already, is what industry would fill the void either when the oil runs out, or they opt to not dig up more?

http://en.wikipedia.org/wiki/File:Norway_treemap.png

jotm• 13 years ago

Yeah, it doesn't work that way. Does anyone give Norway free metal or food? No, they buy it. Their oil prices are also average, so if anything, blame the top 6 exporters for the high overall price :-)

eru3• 13 years ago

Blame the people who don't export oil.

quink2• 13 years ago

There are so many externalities that aren't accounted for when you sell it for a dollar a litre, it's unfair to future generations. Also, Norway isn't all that excessive in international comparison:

http://www.aip.com.au/pricing/internationalprices.htm

Saudi Arabia doing 16 cents a litre isn't helping anyone: http://en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_p...

http://www.tcs.ch/de/assets/reisen-camping/reiseinfos/themen...

kzrdude• 13 years ago

There is no right to have oil, and it is still very cheap for all the work it can do for us.

doug1001• 13 years ago

i 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).

perbu2• 13 years ago

Income tax is not flat. It peaks at 50% (of the salary > $80K). Also education is free for everyone. Very few attend private unis.

Dewie9• 13 years 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.

Dewie9• 13 years ago

i 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.

Perhaps except for people who have only lived there.

qw4• 13 years ago

the cost of a private university is prohibitive for many if not most families

The public universities are free and of good quality. Most of the private universities tend to be more specialized. Some are for students that can't get in to regular studies, and others provide different subjects, such as bachelor degrees in real estate etc.

A degree from a public university is not looked down upon because your employer probably studied at a public university too. The only exception I can think of are those who want an MBA. Many of the MBAs I have met went to a private school ("BI"). Education at "BI" in Oslo costs less than $6000 a year and is not out of reach for most families.

the personal income tax has a high lowest-rate (which i believe is 28%

The tax pays for public health care, welfare, free education, 49 week paid parental leave (100% of salary) and other benefits. If you compare with another country you need to include this in the cost of living.

gasoline prices are silly--about $13 per gallon (if i did my maths correctly)

The price of gasoline is closer to $9 per gallon (15kr per litre), but still too high.

Houshalter3• 13 years ago

The tax pays for public health care, welfare, free education, 49 week paid parental leave (100% of salary) and other benefits. If you compare with another country you need to include this in the cost of living.

None of those things would really benefit someone who only lived there for a year though.

vidarh15• 13 years ago

The price of gasoline is closer to $9 per gallon (15kr per litre), but still too high.

Despite that, note that the UK has Norway beat in terms of percent of gasoline price that goes to taxes.

laurencerowe• 13 years ago

Alcohol is taxed at a very high rate in Norway for health reasons, similar to the tobacco tax rates in the UK.

Everything else though is much more expensive too, and VAT is only part of the story (compare to UK with VAT at 20%.) Much of the additional price in Norway is down to higher local labour costs, though for food protectionism for farmers also plays a part.

As a software engineer I earned a much lower multiple of the wages of a supermarket employee in Norway than when working in Britain, the US or Germany. As a result there are fewer people working in supermarkets, cleaners use more machinery, some services like dry cleaning are rare outside Oslo as they're uneconomic for most people.

The result of all this is that people seem to feel more secure. The power of employers and employees is more balanced. There is an expectation that there should be time for family life (most professionals work 8-4.)

Most developed countries have reached the point where they don't lack resources, they just fail to share them around equitably.

e12e8• 13 years ago

I've lived most of my life in Norway, and also spent a year living in Japan (and visited London, Berlin as well as the east and west coast of the US, and Toronto).

Cost of living in Norway is high, but we also are among the people that spend the least amount of our pay (percentage wise) on food. Effective minimum wage (there is no minimum wage) is around 200k NOK a year, the prime minister makes approximately 800k -- and a reasonable pay is 400k NOK/year (65k USD) -- this is also close to the median wage[1].

All our best universities and colleges are public (and free) -- and there's a government sponsored student loan/stipend (for living expenses) that while too low (and worse than eg: Denmark) -- are good enough that it is possible to live on it (almost no-one does, as you can't both live on it and go out drinking two days a week...).

When I went to Japan in 1997 (just before the crash) -- cost of living in Japan "felt" similar to in Norway. Better quality food (or cheaper depending on your point of view) -- more expensive housing and utilities. As I was in high-school at the time I don't know how salaries relate, AFAIK if you get a "real" job in Japan you will make a decent living, but many young people are stuck in part-time jobs.

Also worth mentioning is the heavy taxation on cars, the recent change in VAT for food (half of the regular 25%) -- and that we still don't pay VAT on books.

I'm not sure if this comment really adds much, but I (along with a few other responders, I suspect) was really thrown by the insinuation that education is not only not free in Norway, but expensive.

[1] http://www.ssb.no/a/aarbok/tab/tab-190.html (note these numbers are after tax, my numbers (which are from memory-ish, are before tax)

blah32497• 13 years ago

My anecdotal experience 3 years ago living in Japan (near Tokyo, for 2 months doing an internship) was that the prices on average were similar to what I experienced back home in California. Occasionally some things were surprisingly more expensive, and others were surprisingly cheap. The 100yen (~$1) stores were better stocked than in the US and I could get most things I needed from them. They also were located in malls and were very nice to shop in. Things like sushi that I expected to be cheaper were about the same price as back in the US (which was seriously disappointing!), and cheaper food was seriously cheap and relatively healthy. I lost like 20 lbs eating all those beef bowls and noodles. Trains were not super cheap, but not overly expensive. It's way way waaaayyyy cheaper than Europe and unlike in Europe they privately owned, aren't subsidized and make a profit which was a relief to hear (I can't think of another country that has an unsubsidized public transportation system) I think the bus from Tokyo to Kyoto was about 40 bucks (my memory is a bit hazy). . Owning a car and driving places from what I understood is extremely expensive. I think most of my coworkers didn't own cars. A relatively short drive on the freeway can easily set you back $50 (tolls roads everywhere). I didn't get any hard figures for wages, but I think generally people didn't make a killing, but people lived comfortably and it seemed they could support a family on one wage. They did however work 12 hours a day... so I don't think they got to enjoy whatever income they made.

vacri3• 13 years ago

In Kuwait, education is free, all the way through university and there is no VAT (sales tax).

Kuwait also engages in slavery. Life ain't so good for those folks.

elwell• 13 years ago

In Kuwait, education is free

In Saudi Arabia, you get paid to attend school.

vidarh15• 13 years ago

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%.

Compared to the US, maybe to some extent. But Norway is also extremely expensive compared to most other European countries, many of which have VAT in the 20% (UK) or above range (Sweden, Denmark)

The other explanation is salaries: The median salary is extremely high, and the salary curves are very flat. The result is that most people have a very good living standard overall despite the price levels (in fact, recently in a poll, people on average reported to be paid about 100k/year more than they feel they need..), but salary contributes to driving up prices far more than it does most other places as that person at the tills serving you, or picking up litter on the street, actually earns a decent salary.

in addition, the personal income tax has a high lowest-rate (which i believe is 28%, and a max rate of 50%).

That's quite misleading. This rate applies to taxable income. Taxable income is calculated by taking your gross income, subtracting the minimum deduction (currently ca. NOK 84,000 / $13,600) which is not taxed at all, and any other deductions, which includes all interest on debts including mortgages (which means you effectively get a 28% deduction on interests on your debts). (edit: and a long laundry list of other things)

Also the marginal top tax rate is only applied on amounts above a certain threshold, meaning your tax only starts getting close to the top tax rate if you're earning in the millions and have an inept tax planner.

netman21• 13 years ago

Australia, in the 1980-90s established a social welfare retirement fund. It is now worth more than their GDP!

femto• 13 years ago

I 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• 13 years ago

Yep, 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-retire...

vidarh15• 13 years ago

Also 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• 13 years ago

There 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-a...

[2]http://en.wikipedia.org/wiki/Resource_curse

discardorama• 13 years ago

An 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-ga...

hansjorg• 13 years ago

Financial 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-00144...

lafar65022• 13 years ago

If 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.

adventured5• 13 years ago

That 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.

e12e8• 13 years ago

It 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.

lafar65022• 13 years ago

I don't think today's prices are excellent from them. North sea oil is much more expensive to produce than in Middle East so Norway's income is lower than Kuwait's. The amount of cheaply accessible oil is diminishing so it's inevitable that prices will go up with rising production costs and limited supply. There are no alternatives to oil in current world's economy, so I think we'll burn all of it before we are forced to build a new economy.

tilsammans• 13 years ago

True in principle, but their oil stock would become so valuable that other countries will just decide to grab it, invade Norway, and plunder the whole lot.

e12e8• 13 years ago

Countries could also (I would argue more easily) nationalize the companies the fund has invested in.

camus2• 13 years ago

That'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• 13 years ago

They'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• 13 years ago

So what are they going to do when the oil runs out?

vidarh15• 13 years ago

Go back to living on the 80% of GDP that is not from the oil + the returns of the wealth fund.

All Norwegians become crown millionaires, in oil saving landmark

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