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).
> 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.
>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.
That's like saying that owning a Mac didn't benefit you, because you needed a playstation to play some game. Then you go on implying that the Mac is not a good computer.
I never implied it wasn't a good computer, er, country. I'm saying it's completely understandable why GP would be upset at the country's absurdly high prices and saying "but look at all the stuff it pays for" isn't really relevant to him because he is not a citizen. Most countries do not tax foreigners that much unless they are working in the country.
To take the argument further, you could say may actual citizens don't benefit from it, for example if they live healthy, or don't have children, or pay for a private education, etc. Subsidies are rarely fair and create bad incentives.
> To take the argument further, you could say may actual citizens don't benefit from it, for example if they live healthy, or don't have children, or pay for a private education, etc. Subsidies are rarely fair and create bad incentives.
"Many citizens" and "Subsidies are rarely fair" seems horribly distorted in the context of free education and health care in Norway.
IMNHO you have a rather distorted idea of "fair" if you think that everyone should get the same, rather than that everyone should get what they need (or could benefit from). The two would only ever be the same in some fantasy realm where everyone started out on equal footing.
The biggest tax-and-subsize activity almost everywhere is children.
Maternity leave. Schools. Universities. Health related stuff is also often more subsidized and more expensive for children and pregnant women.
Norway has a negative (1.88) fertility rate which is typical of Northern European cultures, even with these big subsidies. I wonder what it would be unsubsidized.
Someone who only live there for a year also don't pay most of it. While they are affected by the VAT (which is not that out of line with Europe in general), most people do not spend all of their money on goods that are VAT chargeable. E.g. your rent is not. Last time I calculated the relative cost of taxation between Norway (where I'm from), the UK (where I live), and California (we were considering a move), VAT in Norway would have account for at most about 4% of my total living costs at my salary etc.
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.
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.
> My anecdotal experience 3 years ago living in Japan
I should note that I was back in Japan in 2002 -- and prices seemed to have almost stood still -- I'm not surprised if Japan today is much cheaper than Norway.
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.
> 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.
"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.
The private universities are rarely better than the public ones outside of a couple of narrow fields. Certainly if your want to study a STEM subject, Economics, Medicine or most humanities the public universities are at least as good and probably better than the private ones. The only area where private universities arguably have an edge is in Business and Management subjects.
And even the most expensive private universities are 'only' $10-15k a year, which while certainly a lot of money, is quite cheap compared to the US. Combine this with a relatively high minimum wage and it's quite possible to pay the tuition with a part time job while studying.
AFAIK, most private schools also receive some funding by the government (if they want).
You seem to believe that private schools are always better, but at least in my field, the top public universities are regarded as better than any private school.
No, most people do not want to go to a private school. Amongst many Norwegians, going to private school for lower education is looked down upon and seen to imply you're either a stuck up snob or dumb enough to need special tuition.
And going to a private school for higher education is common only if you want specialised courses (MBA) or for some reason want to study abroad but is by no means economically impossible for most families.
As for cost: Salaries are also so high that a very substantial portion of families could afford to ship their son or daughter off to even a top level private US or UK university (especially given that part of that too can be subsidised by Norwegian government subsidies, and part financed with low cost student loans from the government)
(Edit: this has been even more true the last few years, as the financial crisis has made dollars and pounds dirt cheap from a Norwegian point of view)
> 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.
> 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.
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.
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.
"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.
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)
> 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.
I'm curious what you're getting at with 'progressive system' statement.
I was just pointing out the absolute division of the numbers for both seem like a similar, if ultimately meaningless, metric.
I won't profess to be an economist and/or understand the intricate differences between the US and NO government taxing/budgeting/accounting, so any enlightenment is welcome.
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.
Yes, that's pretty much what a lot of Middle Eastern countries do, and it's a terrible long-term economic strategy.
Oil wealth is notoriously volatile, and it creates all manner of bad habits (for instance, scaling a services economy to match the scale of the oil wealth; the latter is a finite commodity, and the former is extremely hard to scale down once built up).
Norway has been relatively smart in managing its resource boom. It hasn't completely subsidized the cost of living, spent its oil wealth on giant, shiny objects, hoarded the wealth amongst a corrupt and tiny class of elites, or built an enormous social-services machine that won't survive an oil bust or pricing collapse. It's not spending above its means, presumably under the realization that its means came from a geological lottery ticket.
When your country hits the oil jackpot, your job is to convert the oil money to real industry. You don't splurge on mega-hotels, distribute the money frivolously, etc. You need to use it to create the basis for a non-oil-dependent economy.
> When your country hits the oil jackpot, your job is to convert the oil money to real industry. You don't splurge on mega-hotels, distribute the money frivolously, etc. You need to use it to create the basis for a non-oil-dependent economy.
In many cases, building mega-hotels is preparing for a post-oil future by establishing yourself as a tourism center. Witness Dubai, which basically has run out of oil but sustains its economy nonetheless.
Abu Dhabi, also in the Emirates, has followed the Norwegian model by building up a massive sovereign wealth fund which can replace/stabilize oil revenue indefinitely. Their fund is the second largest in the world, despite having a substantially smaller population (it works out to about $1.4 million per citizen).
Did Dubai ever have much oil wealth on its own? Dubai is also an overbuilt mess right now, a city can only support so many 7 star hotels (whose guests are mostly rich from oil anyways coming to Dubai to play).
Is Abu Dhabi oil owned by the citizens, or by the royal family like in Saudi? Later down the line, that will be quite an important distinction.
> Did Dubai ever have much oil wealth on its own? Dubai is also an overbuilt mess right now, a city can only support so many 7 star hotels (whose guests are mostly rich from oil anyways coming to Dubai to play).
Dubai certainly had a lot less oil to start with, which is why it expanded so aggressively. Definitely overshot the mark there, but the issue isn't catastrophic (they do have a strong tourism base).
> Is Abu Dhabi oil owned by the citizens, or by the royal family like in Saudi? Later down the line, that will be quite an important distinction.
It's owned by the national oil company which manages it for the government. Part of the revenue is diverted into expansion, part into the sovereign wealth fund, and a lot into subsidies and benefits for citizens. Generally speaking the UAE is managed much more equitably than Saudi, with the benefits of oil money used to aid all citizens (for example, universal healthcare).
It's funny, discussing this story on Facebook, a friend of mine, staunch left-winger, said that Thatcher "pissed the money away". Hang on a second, I said. Are you now saying that government spending/the welfare state is just pissing money away?
Well, if you spend it over a short period rather than a long period, it can be considered "pissing money away" without changing your views on what it was spent on.
Having said that, I don't quite recall Thatcher being famous for spending oil revenues on expanding the welfare state (and it doesn't sound like something her supporters, then or now, would approve of) so maybe I'm missing something here?
Are 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.
Very, 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.
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.
>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".
"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)
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.
>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.
Egypt used to be an agricultural powerhouse and wheat exporter. The reason it's not now, is partly because they planted oddball crops for export to Europe, but principally because land and water was taken from "traditional" farmers and given to well-connected rich people and foreign companies. (This was an even worse form of land reform than that seen in other parts of Africa.) Mubarak deserves everything he's gotten, and worse. If he had left the traditional farm sector intact, his cronies wouldn't have been able to steal so much, but Egypt would still be able to feed itself, and he might still have been in power today.
Food security is not the same as milk security. Food security is a matter of national security, milk security is not. A country can do quite well with a reduced supply of milk.
In Egypt the cost of weat increased toghether with the price of all other grains. And people need grains (but not weat), so they revolted.
Also, what their agriculture changed for is not very relevant, the root of the problem is that their agriculture does not produce enough value for direct consuption or exchange into food (what made their money worth less, and imported food expensive). Growing fruits probably helped reduce the problem.
there are different levels of security. "Thanks God, children aren't going to bed hungry (and thus probably survive next few days)" vs. "children going to bed after glass of good milk and cookie (and thus probably grow healthy)". Norway [successfully] invests its national wealth in maintaining the latter level. Looks very smart to me.
To be able to give them meaningful advice to do things differently (like, for example, importing), one has to show an example of a country which does things differently (and at least as successful in achieving the goal as Norway).
Apparently the Japanese consume 76.45 kg milk per year per person (as of 2007), while Norwegians consume 261.52 kg. Yet the Japanese have no problem living healthy, long lives.
South Korea gets by merrily with just 26.9 kg, roughly half of Palestine (49.17 kg). (Sure, our country has lots of social/health problems, but "not enough milk" is not one of them.)
"Where the C allele indicated lactase non-persistence and the T allele indicated lactase persistence, the study found that women that were homozygous for the C allele exhibited worse health than women with a C and a T allele and women with two T alleles. Women who were CC reported more hip and wrist fractures, more osteoporosis, and more cataracts than the other groups.[13] They also were on average 4–6 mm shorter than the other women, as well as slightly lighter in weight"
For colder, European climate, bigger weight/size is preferable (and bigger body requires stronger bones). Not so for warmer/Asian areas where smaller body size is ok and thus more favorable, in particular because it requires less animal protein, etc... which is less available there than in Europe.
According to Wikipedia, average January temperature of Oslo is −3 °C. That of Beijing is −3.7 °C. I wonder where you got the idea of "colder European" vs. "warm Asian" climate.
Besides, descendants of Scandinavian immigrants have no problem living quite comfortably in, say, Brazil. The genetic difference between different peoples is not large enough to justify treating milk as essential for some group of people but not for others. It's just a convenient and relatively cheap source of nutrition, that's all.
>I wonder where you got the idea of "colder European" vs. "warm Asian" climate.
No kidding. Oslo, annual average, 6.5C, Beijing : 12.5C. That's 59 latitude vs. 39, different Sun angle, longer days, etc... you know. And, btw, northern Chinese noticeably taller than south.
>The genetic difference between different peoples is not large enough to justify treating milk as essential for some group of people but not for others.
the study mentioned above explicitly describes the results of consuming milk vs. not consuming due to genetic difference. To me the difference is essential (grew in Russia). As result of evolution in Norway and overall Europe, people there also treat milk as essential.
It doesn't really matter if they produced wheat or not - as it's a globally traded commodity, the price of Egyptian wheat would've been the same (unless the country stepped out of international free trade agreements, which would've had massive consequences).
... massive consequences such as keeping your population alive.
Don't buy into the free market propaganda too much. The biggest proponents of free market propaganda (I am looking at the EU and the US) have programs that explicitly target food security. Neither would hesitate to introduce export controls to prevent famine-induced revolts.
that's the point - Egypt didn't take necessary measures for their food security.
I lived through food/gas shortages and high prices at the end of USSR so i think i know how Egypt people felt. Now living in the US i appreciate the US disregard for international free trade agreements when it comes to food and gas - i.e. farmers subsidies and prohibition for oil export - thus making sure that shortages and high-prices of 197x have much less chances of happening again. Free trade is a great idea, yet it works only when implemented by all participants to the same extent and it just doesn't make any sense when implemented unilaterally (or by minor number of participants and/or to different degree).
Dairy consumption is not even the global norm because most people have lactose intolerance. Most Northern Europeans do not.
It very much is considered a vital part of diet in Norway, though, to the point where you'd pretty much be considered to be abusing your children if you don't ensure they drink lots of milk. While we certainly could survive without it, any politicians suggesting to Norwegians we should do without milk would find themselves out of a political career.
Just to point out, lactose intolerance exists at low levels in Norway. I wouldn't recommend ensuring that the lactose intolerant drink lots of milk just because it's part of the culture.
If one staple food disappears, the country won't just starve; that would be stupid. It will start eating something else. If Norway entirely stopped producing food, it would still eat just fine, and if it entirely stopped eating dairy, it would still have plenty of food.
As long as Norway can import food, there is no problem. That is not what food security is about in the case of Norway - we're wealthy, we can outbid "anyone" for food if need be.
The issue is what if we can't. As I've pointed out elsewhere in this thread, this has happened - the most well known instance being the British 5 year naval blockade during the Napoleonic wars, which caused years of famine, and death.
And because of Norway's extremely strategic position, with a long coast line and many defensible ports if you have naval superiority, coupled with huge oil industry, and a position to lock the Russian Northern fleet out of the Atlantic, any defence planning for Norway is going to assume that in the case of another war, Norway will either be occupied or attempted blockaded or both.
Then the situation changes. Norway has very little arable land due to the mountains, so it is not a given that taking the dairy away would leave us with sufficient food in the case of a blockade. Certainly during the British blockade we did not have enough food to sustain a much smaller population.
How do the cows eat? I've always been under the impression that raising animals is vastly more resource intensive than just feeding yourself on plants. Raymond Crotty, I believe, documented that raising cows for dairy is something like ten times more efficient than raising them for meat, but I'd still expect grain to be even easier to get -- animals are something of a luxury item.
>How do the cows eat? I've always been under the impression that raising animals is vastly more resource intensive than just feeding yourself on plants.
the cows (and other grazing animals in their group) evolved very special stomach to consume the grass (parts of grasses) which aren't consumable by predators like humans.
The comparison of consuming human-edible plants (or their parts) directly vs. feeding it to cows is rooted in industrialized beef production where corn is fed to cows. Such wasteful conversion of human edible food into more tastier/pricier human edible food allows for higher revenue and larder total profits - people will eat the same calories, beef is just more expensive packaging of it and thus generates more total revenue and profit in the societies which can afford it and want it.
>I'd still expect grain to be even easier to get -- animals are something of a luxury item
In normal situation, cows milk is a source of calories _additional_ to the grain as cows are fed on grasses grown where grain cultivation doesn't make much sense - short summer, not plain land, etc... They also fed on [minimally processed - fermented in big piles] wheat stems after grain is extracted. The cows feed today also includes processed waste from other areas of food industry - the quality of this stuff varies greatly from country to country depending on regulations and industry and society mentality about it.
>If one staple food disappears, the country won't just starve; that would be stupid.
shortage of staple food will cause price spike with related economical/political/social effects. Staple food isn't just a whimsical choice of consumer. Beside some exceptions (where people moved and brought their tradition with them), a staple food is a result of hundreds or thousands of years of evolutionary optimization for that population in that region. Milk in Europe is exactly such a case, and is a very important one to the population there. (see my other post in this thread https://news.ycombinator.com/item?id=7034795). Specifically, in case of milk in Norway any issues with its availability, in addition to short term price-spike related effects, would in long term affect negatively health and well being of children whose body/skeleton would be forming at the time.
I'm completely on board with the idea that eliminating milk from the northwest european diet would be hugely disruptive and have unknown knock-on nutritional effects due to long-term adaptation to milk consumption. My point in that area was limited to the idea that hunger wouldn't be an issue.
However, my other point, that Norway can easily import 100% of its food demand (see "if Norway entirely stopped producing food, it would still eat just fine"), stands.
I absolutely guarantee you that you can live quite healthily without dairy. You're essentially arguing against all free trade. Should Norway policy ensure it can build its own computers, phones, or shoes?
"Rather, the world of 1913 was quite like that of 2013: modern, substantially urbanised and, even as Woodrow Wilson set about slashing import tariffs, thriving on global trade. "
> "Rather, the world of 1913 was quite like that of 2013: modern, substantially urbanised and, even as Woodrow Wilson set about slashing import tariffs, thriving on global trade. "
Good point - people were in fact using the argument that the extent of international trade made large wars between powers like Germany and the UK unlikely...
There's a difference between food security and securing access to "nice to haves". Food security is about ensuring short-term survival in the event of war (think blockade), or global upheavals large enough to prevent trade. The entire point is that it is protection against a situation where trade is disrupted and the world is not at peace.
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.
Unless your ports are blockaded by the enemy. Exactly because of the oil, and because of the strategic position in access to the Russian arctic (the Russian Northern fleet can be blocked in if you have sufficient control in Northern Norway), in the case of any major war Norway is likely to find itself either blockaded or occupied or both.
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.
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.
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.
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.
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.
> 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?
The 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.
Australians on average work 1855 hours a year, or 38.6 hours a week if you assume they work 48 weeks a year.... US workers are second, averaging 1835 hours a year, followed by Japan (1821) and New Zealand (1817). Finland (1730) led the table in Western Europe, followed by the much-maligned British workers, who put in 1708 hours a year - three hours a week less than Australians.[1]
The irony being that you're talking about a country whose GDP per capita, even when you knock off 20% of it that's mining-related, is in the global top ten.
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?
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
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.
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.
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.
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.
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 ...)
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.
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 :)
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.
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.
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.
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.
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.
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.
Perhaps 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?
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.
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.
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.
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.
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):
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.
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.
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.
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.
It'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.
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.
The fund does not invest in larger stakes than about 10% per company, I believe, so that would mean pissing off a whole lot of their own citizens too, to obtain amounts adding up to a quite small percentage of their own economy.
There's no reason (once you've decided to nationalize) that you couldn't just nationalize foreign interests (or even interests held by a certain (group of) nations -- such as a nation you're at war with?
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.
"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.
"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.
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.
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):
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.
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%.)
Hesitate before drawing broad conclusions - they discovered oil in their back yard, are now rich. Not a reflection on their great foresight or thriftiness.
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!)
> 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.
That'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.
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.
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.
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...
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.
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:
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?
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 :-)
Still 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.
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).