
Norweigan oil fund - punnerud
https://www.nbim.no/en/
======
lnsru
Wow! These people must be extraordinary to use oil money this way! Not
kidding! Never been in Norway, but in countries I have ever been this would be
barely possible due to corruption and the needs of the politician’s buddies.
Like yachts, private jets, Bentleys and Vertu phones. This $186k/person isn’t
far from what average German poses:
[https://www.bundesbank.de/resource/blob/617492/cd59713c156ad...](https://www.bundesbank.de/resource/blob/617492/cd59713c156ad135e0a84518cd5ed4b6/mL/2016-03-household-
data.pdf)

~~~
buboard
Norway was lucky to be a very developed society before oil was discovered. In
most countries oil is a curse

~~~
lordnacho
I wonder if it's about being developed, vs being about having a high-trust
society?

In a lot of places people will immediately get suspicious if you say you're
setting up a government fund to hold everyone's money. For the benefit of
society, of course.

~~~
AlexTWithBeard
It's about Norwegian climate: you don't work - you freeze to death in winter.
In a dozen of generations an idea that everyone must work hard becomes an
obvious thing.

~~~
varjag
Norwegian climate in the most populated areas isn't particularly harsh.

~~~
AlexTWithBeard
Exactly.

Norwegian climate is not so harsh that it makes life an perpetual fight for
survival. But it's nasty enough to slap one's lazy nose every once in a while.

~~~
varjag
It's not so harsh in Norwegian West, East and South as to be remarkable in any
respect. Poland has rougher climate. Northern parts and central-inland in the
peninsula _are_ cold, but relatively sparsely populated.

Norway has its natural limitations though which made for a tougher life. Like
insufficient options for agriculture, one thing that made feudal system here
impossible and diets fairly lean.

------
lr4444lr
The Norwegian success is the single biggest piece of evidence as to why the
Venezuelan catastrophe was largely avoidable, and the fault of irresponsible
leadership.

~~~
cagenut
I can't stand this ideological sports-team type of commentary, so just to add
some real information and context (after my downvote):

Venezuela produces ~70k barrels per person per day. Norway produces a little
more than half as much total oil, but with one-sixth the population it works
out to ~330k barrels per person per day. An order of magnitude per-capita
difference.

~~~
throwaway2019V
That's not an order of a magnitude.

Even then, so, Venezuela produces 1/5th per capita the oil of Norway. Why
doesn't there exist a fund with $37k/person in Venezuela?

~~~
kwhitefoot
You could ask a similar question of the UK.

~~~
conjectures
This is a question I ask.

The UK policy was, effectively, 'paaarty!'

~~~
sgt101
Well - capitalise trade in The City of London; without the oil it's pretty
clear London wouldn't have developed the way it did.

~~~
conjectures
Rather than the story of financial degregulation?

Sceptical.

------
rfwhyte
One of the most mind blowing things to me, is that where I'm from (Canada)
we've pumped almost 2.5 times more oil and gas than Nowrway over the past 30
years, yet our "oil fund" is somewhere around $20 Billion. Norway decided the
benefits of resource extraction should be universal, while my country decided
that the benefits should go to the wealthy and multi-national corporations.

~~~
mdorazio
Ha. Here in the US where we produce more than double what Canada does, there
isn't even an oil fund.

~~~
outside1234
The oil fund is Exxon, which is in the S&P 500, which is in your 401k.

~~~
odonnellryan
Only available to people who have the means or opportunity to invest. We're
taking from everyone and giving to few.

~~~
hcurtiss
There are a lot of people who rely on those investments, whether through their
government retirement, their employer's retirement, or through their own
holdings. Even many social programs are funded with investments in equities.

~~~
asdfgasd
Slightly less than half of all Americans have any investment in the stock
market. Pension funds were largely replaced with 401k's, but salaries were not
increased to compensate.

While you're technically correct, the stock market primarily benefits those
with enough disposable income to generate large investments where they do not
need to draw down the principle, and that certainly isn't the majority of
Americans.

------
Expez
I haven't seen this fact mentioned in this thread yet, but it's super
important: This stack of money doesn't belong to any one generation. It's set
aside for all future generations to enjoy.

Each year the government can choose to pull some of the money in to the
current budget, but by law[0] they can't pull in more than 3%. This is the
fund's estimated sustainable yearly return (It was adjusted down from 4% in
2017).

Some posters in this thread seem to think that this is all going to get spent
on covering too-generous promises of pensions (yes we have those too!), but
that isn't going to happen. It would be a travesty to rob Peter to pay Paul
even if Peter hasn't been born yet. Everyone here generally agree on this.

[0]
[https://www.statsbudsjettet.no/Statsbudsjettet-2019/Statsbud...](https://www.statsbudsjettet.no/Statsbudsjettet-2019/Statsbudsjettet-
fra-A-til-A/Handlingsregelen/)

------
hackathonguy
"On average, the fund holds 1.4 percent of all of the world’s listed
companies."

This blew my mind.

~~~
erikpukinskis
Meaning a stake in 1.4% of companies, no indication of size of stake?

~~~
kgwgk
No, meaning it owns 1.4% of the global public equity market.

They have some $700bn in stocks. The market cap of the S&P 500 is $25tn. If
they held US large cap stocks only they would have almost 3% of each one of
the S&P 500 companies.

~~~
dmoy
And US is about 50% of the world market cap, so yea 1.4% sounds about right.

------
a-priori
I did some quick math and with their current annual return rate of 5.8%, the
returns from the the Oil Fund could finance the government's budget entirely
once it gets to be about $2T in size. That's about 2x its current size.

That's still about 20 years away at their current growth rate, and the
government budget would probably increase by then, but it's still probably
achievable. What happens then? Norway could theoretically cut its other
income, including income tax, to zero and still maintain its current expenses.

~~~
marvin
Unfortunately (as a Norwegian), that is never going to happen. Norway's is a
success story, but there is a darker side to the oil fund. This money will be
spent on something. Our public sector has a tendency to grow without
questioning from any political group, such that the total tax level stays the
same, regardless of any incomes from the oil fund.

Currently, 1/3 of working-age Norwegians work in the public sector. 1/3 works
in the private sector, and the final third are either unemployed or qualify
for government benefits. (Meaning: Retired, long-term disabled, in full-time
parental leave and so on). That this seems sustainable at all is very strange.
We might as well go straight to a large-scale basic income experiment, because
we almost have a basic income system in place already. In my opinion, this
would be a more honest way of providing government benefits than the system we
already have.

Currently, 3-4% of the oil fund is liquidated each year to pay for the deficit
in the national budget, while total taxation has in fact _increased_ under the
current Right government.

To my eyes, Norway has an exotic form of Dutch Disease in the form of our
government spending, which is prevented from becoming a catastrophe by the oil
fund. It will be interesting to see what the future brings, but it's not all
roses.

~~~
dkural
I agree with your general argument - one thing to nitpick. Full time parental
leave is not a bad thing in creating social wealth. Domestic labor is often
unappreciated - until one has to do it or pay for it. I wouldn't lump those in
with what you clearly consider "unproductive" use of human capital and labor.
You get the benefit of a meal or a clean house, and if you pay for a maid and
a cook, it also shows up on the national statistics for GDP.

~~~
marvin
Oh, I’m not really opposed to a strong social safety net at all, if it came
across like that. In fact, a basic income system would be very interesting to
try out. Everything doesn’t have to be optimized for productivity; it’s
quality of life and individual choice that matters.

I’m just opposed to some aspects of the sustainability and wisdom of the
current Norwegian system, as well as slightly disillusioned regarding the lack
of quality debate around this in the country :)

------
lelima
A friend lives in Oslo, sometimes I visit, it shock me the amount of electric
vehicles, in one single street all cars parked were Tesla(not the posh area).

The city have so much nature, is even hard to explain.

~~~
daj40
Along with being more eco minded, electric cars are actually more affordable
in Norway, there is a significant tax placed on other vehicles.

[https://elbil.no/english/norwegian-ev-
policy/](https://elbil.no/english/norwegian-ev-policy/)

~~~
Y_Y
They let poor countries burn the oil, and use the money to pay for electric
cars.

~~~
kwhitefoot
True but other countries also let poor countries burn the oil and do nothing
useful with the money.

~~~
Cthulhu_
Some invest it themselves into real estate, both in their own country (like
highest towers, most fancy hotel, palm tree shaped islands) and abroad
(skyscrapers and office buildings in various financial structures).

They're really setting themselves up for them and their future generations to
remain rich and comfortable for the forseeable future even when oil dries up
or demand goes down.

------
badestrand
This transparency is just admirable, with investments down to the exact real
estate properties that is invested in. Just beautiful.

~~~
nshung
So much transparency is that, in Norway, you can look up the yearly income of
anyone online on the government's website :)

------
capsch
Yes those social Norwegian's invested; and the UK gave there north sea oil
revenues to all the oligarchs

~~~
a_bonobo
Same thing in Australia, the wealth coming from the resources boom has been
and is being given to a few rich people, not the general public (who are
having social services slashed regularly)

~~~
southerndrift
Compare Australian wages to the rest of the world. If you go on vacation to
other places you see that Australians make more than people from other
industrialized nations. You don't see it because your plumber wants to
participate, too.

~~~
A2017U1
How is that relevant? Australian wages are high because of a long period of
unionised action demanding better wages and working conditions in the 20th
century. It's tangential to having a lot of natural resources.

Norwegian wages are good too, Venezuelan and Saudi wages are terrible.

We squandered all our mineral wealth on nonsense, have huge respect for what
the Norwegians have achieved with their fund.

------
dorfsmay
Think hard about it, would you rather your government do something like this,
or get a cheque every year like in Alaska (or right before an election in
Alberta)?

------
abvdasker
A lot of comments in this thread seem fixated on the fact that this originated
from oil profits, but to me it feels like more of a consequence of the
Norwegian government's partial public ownership of its domestic energy
companies and other industries. Lots of countries have a surplus of at least
one natural resource; few of them have central governments with the authority
(and lack of corruption) to publicly own those resources. Most governments
just can't keep their hands out of the cookie jar.

Every time I hear someone talk about socialism, whether its pundits or
politicians or columnists, they talk about welfare. Everyone seems to have
forgotten that that public ownership of capital is by definition the more
important part of socialist policy that makes welfare possible. Norway is
probably the best example of this idea's power. I'm not saying socialism is
without weaknesses, but I don't understand how anyone can look at Norway and
think that it doesn't work or is somehow evil.

~~~
asdfgasd
Yes, thinking of funds like this as cash flow is absolutely a mistake. Strong
democratic ownership of capital will be necessary for true democratization of
society, and this is an important step (although too centralized in my
uninformed opinion :D).

------
nojvek
The thing that's the most powerful to me is that they actively decide which
companies aren't following ethical practices and decide to invest away from
them.

[https://www.nbim.no/en/the-fund/news-list/2019/decision-
to-r...](https://www.nbim.no/en/the-fund/news-list/2019/decision-to-revoke-
exclusions-of-companies-from-the-government-pension-fund-global/)

When the companies behave properly and decide to follow ethical behavior, they
put them back again on the investment list.

I also wonder how the Softbank 100B vision fund is going to fare compared to
the Norway investment fund. Although 5% growth rate sounds meager, they have
done well since 1998, and it seems that the fund is generally betting on low
risk returns.

Massive kudos to Norway for showing the world how not to fuck up your country
like Venezuela when you're sitting on a money mountain.

------
harryh
Some points of comparison.

\- CalPERS[1] has about $360 billion in assets under management.

\- The US Social Security Trust fund (which, depending on your POV you might
count as an accounting fiction) is about $2.9 trillion.

\- Vanguard has about $5.3 trillion in AUM.

1\. California Public Employees' Retirement System

~~~
millettjon
How many employees does this cover? California has almost 40 million people.
Norway has about 5.3 million.

~~~
harryh
~1.6 million employees + their families for CalPERS

------
godelski
Considering this is explicitly stated to be for welfare, it would be really
interesting to see a major UBI experiment. If the fund doesn't grow there's
186k 4 per person could be 12k/yr for over 15 years.

~~~
Ididntdothis
15 years is not UBI. If you can’t rely on it being around for the rest of your
life it would be insane to leave your career to live on UBI.

~~~
belltaco
I don't the point of UBI is for everyone to leave their careers. If anything,
it's the opposite.

~~~
godelski
Which is exactly why UBI is generally suggested to give below the poverty
line. Enough to survive but not enough to be comfortable. Enough to get you
through downturns but not enough where you'll abandon a well paying job.

~~~
buboard
Which is why i can't fathom why every business would not raise their prices to
match the UBI minimum. I mean it's not like there would be anyone who can't
afford that.

~~~
godelski
Because UBI could open their market to more people. If they can make the same
profit per person but increase their market size, why raise prices? That
prices out more people. In fact this is commonly done now. You sell at a
competitive price to expand your market share. It's exactly the tactic of
companies like Amazon and Walmart. The problem is if a company has a monopoly
and the good is a necessity.

~~~
buboard
> If they can make the same profit per person but increase their market size,
> why raise prices

There is no dichotomy here- their market size increases magically with UBI. If
the answer to that question was even remotely close to yes, the tech sector
would be full of hungry workers.

------
buboard
Assuming that a fund like that grows ~10% per year or so, each norwegian makes
a bonus of 19230.7 just by existing. That is enough for a family to live in
the european south.

[https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...](https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway#/media/File:Norway_Oil_Fund.png)

~~~
getup8
"Since 1998 the fund has generated an annual return of 5.8 percent, or 4,404
billion kroner."

~~~
buboard
Still, for a family of 4 that's ~ 45.000$ of free money. If southern european
countries were smart , they would give incentives to norwegians to move there
and have a permanent vacation in the sun.

~~~
vasco
The fund is not distributing to citizens like that.

------
dg4
It's interesting to me that they don't appear to hold private equity or
venture funds, unless I'm missing something. Presumably at that scale they
have unlimited access to any asset class in the world. Does anyone have any
insight as to why they might be avoiding those?

~~~
duderific
My guess would be that they are considered too risky.

------
simonebrunozzi
Interesting news [0] on companies that were previously on the "black list" of
the fund's investments (most notably, Rio Tinto):

> "Decision to revoke exclusions of companies from the Government Pension Fund
> Global"

> Norges Bank has decided to revoke the exclusions of Grupo Carso SAB de CV,
> General Dynamics Corp, Nutrien Ltd, Rio Tinto Ltd, Rio Tinto Plc, Walmart
> Inc and Wal-Mart de Mexico SAB de CV from the Government Pension Fund
> Global.

[0]: [https://www.nbim.no/en/the-fund/news-list/2019/decision-
to-r...](https://www.nbim.no/en/the-fund/news-list/2019/decision-to-revoke-
exclusions-of-companies-from-the-government-pension-fund-global/)

------
joshspankit
There but for the poor policial decisions goes Canada

------
outside1234
And all it cost was the earth's climate.

I think this "oil fund" will be an interesting target when countries and
states start disappearing under water and their crops start failing for
reparations.

Also, why does Norway not contribute the full 2% to NATO spending again?

~~~
punnerud
We have the second largest investment per person in NATO.

1\. US = 1894 USD (3,5% GDP)

2\. Norway = 1483 (1,61%)

3\. UK = 899 (2,1%)

4\. France = 787 (1,81%)

5\. Canada = 643 (1,23%)

[https://www.regjeringen.no/no/tema/forsvar/innsikt/budsjett/...](https://www.regjeringen.no/no/tema/forsvar/innsikt/budsjett/budsjettgrafikk2019/nato/id2613480/)

Because of the GDP-measure, if we stop producing oil/gas we will be over the
2% but with a lot of value in the ‘bank’. So the GDP measure is not the best.
We still try to get to 2% by building up our own industry around the money,
not pending it blindly.

~~~
outside1234
The NATO treaty is that every member will spend 2% of GDP and nothing about
per person or per capita. This keeps it fair for countries that are less
wealthy.

------
wslh
Holding details: [https://www.nbim.no/en/the-fund/holdings/holdings-as-
at-31.1...](https://www.nbim.no/en/the-fund/holdings/holdings-as-
at-31.12.2018/)

------
Kjeldahl
Surprised nobody mentioned that the whole fund and its future returns have
been promised away already as future pension for the people working for the
government (far too many). This is due to politicians and a too large part of
the population that mistake "feeling good" as "being smart", and failure to
recognize that the economic model that has worked for as long as the oil
revenues kept flowing in, will stop working once the oil revenues start
declining. There is no frugality, and all the traditional parties on the
right/conservative side would be characterized as socialist in most other
developed countries. And as the government overspending keeps growing, so do
the taxes...

~~~
andness
The "About the fund" page has a section called "The fund's purpose and
history" which seems to completely contradict what you're saying.

~~~
marvin
It's a contentious political question, and it's impossible to make predictions
about how the fund might eventually be emptied. We could easily end up on a
track that would empty the fund in 50 years, but of course you'd hope the
electorate is wise enough not to let this happen.

------
royandre
Our fund has grown by 500 Billion Norwegian kroner (aprox $55 USD Billion)
just since April this year

------
Keyframe
What's the percentage of all US stocks fund owns?

~~~
anthonybsd
[https://www.nbim.no/contentassets/d3a372eb9d234e57a07caaf0f3...](https://www.nbim.no/contentassets/d3a372eb9d234e57a07caaf0f35cef67/spu_1q_19_web.pdf)

Updated: 1.3%

Edit: Oops, I misunderstood a question. Actually further in PDF they specify
that US specifically is 39%, which is roughly 400 billion. If we go by this
number of total capitalization of the US stocks being 30 trillion, then
Norwegian oil fund owns 0.4/30 which is 1.3%

~~~
ldite
The quote is:

> North American stocks returned 14.6 percent and amounted to 41.4 percent of
> the equity portfolio.

That's to say 41% of their equities are North American stocks, _not_ that they
own 41% of all North American stocks!

~~~
isostatic
41% of all US stocks would be about $13 Trillion

------
seaghost
Right people on the right places. Simple as that.

------
Gravityloss
Does Alaska have something like this? Or Texas?

~~~
RankingMember
Alaska does, and also pays a dividend every year:
[https://en.wikipedia.org/wiki/Alaska_Permanent_Fund](https://en.wikipedia.org/wiki/Alaska_Permanent_Fund)

------
calvinmorrison
.

~~~
ginko
No, it's in USD. it's about 9.5 trillion kroner.

------
cheeky78
Isn't this contributing to climate change? The economy everyone uses as an
example to replace the current system in the US...

~~~
BluffFace
Perhaps this is why they can afford many government programs that the US
simply cannot. Without a prolific income stream comparable to Norwegian oil,
the only way to provide more social services is to tax individuals and
businesses harder.

Tax any group too heavily and you create brain drain, which hurts in the long
run.

~~~
michaeljohansen
Norwegian software developer here. I pay my taxes with pleasure, knowing that
the money supported my education, my ability to go to the hospital, good
roads, good airports, and lots of other public functions that are great
because we collectively invest in them. I think anything below 20% in taxes
simply means a country's public functions will suffer.

It's weird to me that Americans have so much against taxes. If a country has a
low degree of curruption, and has incentives to innovate in the public sector,
then taxes are a good thing.

Obviously I can't speak for the general population, but as for my close
proximity: My colleagues think taxes are good too. No brain drain here.

~~~
logicchains
Take a look at what the American government budget is spent on:
[https://www.nationalpriorities.org/budget-basics/federal-
bud...](https://www.nationalpriorities.org/budget-basics/federal-
budget-101/spending/) (scroll down to "Total Federal Spending 2015"). The
three largest parts of the spending pie, constituting over two thirds of
government spending, are "Social Security, Unemployment and Labor", "Medicare
and Health", and "Military". Less than 20% goes to education/infrastructure.
Many conservative Americans oppose welfare and socialised medicine, and
similarly many liberal Americans oppose high military spending (which makes up
over half of "Discretionary Spending"), so it's easy to see why they think
their taxes are being wasted. There are countries like Singapore that have
extremely good infrastructure and schooling with government spending under 20%
of GDP, because they spend only on infrastructure, not welfare, so high
spending isn't a prerequisite for good infrastructure.

~~~
jandrewrogers
Less than 20% of Federal spending goes to education and infrastructure because
the States pay for most education and infrastructure, it is misleading to only
use Federal numbers for services provided primarily by States.

The US spends more on K-12 education alone than on the military.

------
growlist
I do wonder whether this fund should be subject to punitive measures, since it
is built on an activity that is generally acknowledged to be destroying the
planet. It's not right that a group of people should be able to insulate
themselves from the carnage they have wrought.

------
panpanna
> On average, the fund holds 1.4 percent of all of the world’s listed
> companies.

Why fund businesses in other countires? Shouldn't Norway try to set up some
more industries at home?

Everyone claim Europe (was: EU) needs more VC funding to stop the brain drain.
Well, here is a huge pool of money just waiting to be spent

~~~
vetinari
Norway is not an EU member, so by funding EU industries, they would found
businesses in other countries ;)

~~~
punnerud
We have to follow all their legislations and fund a lot of EU investment
(based on our GDP). So we are practically a member, but don't get to vote.

This is not a bad thing because EU is mainly about social benefits, and not
politics as we are used to (and a lot of people think):
[http://www.europarl.europa.eu/legislative-
train/](http://www.europarl.europa.eu/legislative-train/)

~~~
panpanna
EU is also about single market (to simplify life for businesses), which iirc
Norway is mostly part of.

