
All Norwegians become crown millionaires, in oil saving landmark - ibsathish
http://www.reuters.com/article/2014/01/08/us-norway-millionaires-idUSBREA0710U20140108
======
doug1001
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).

~~~
qw
_> 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.

~~~
Houshalter
>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.

~~~
atmosx
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_.

~~~
Houshalter
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.

~~~
e12e
> 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.

------
jbyers
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.

~~~
lsaferite
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.

~~~
adventured
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)

~~~
nhaehnle
Keep in mind that the price level in Norway is very high. Depending on how the
NOK numbers are converted in USD, the numbers might be misleading.

~~~
adventured
I understand, it's just meant to put numbers to the parent's reference.

------
VladRussian2
>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_...](http://en.wikipedia.org/wiki/Dairy_farming_in_Canada#Supply_management)
:

"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
> _and the alternative? Milking polar bears?_

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

~~~
VladRussian2
>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.

~~~
stefan_kendall
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?

A world that relies on trade is a world at peace.

~~~
VladRussian2
>You're essentially arguing against all free trade.

it is a stretch. Free trade just isn't always the best approach to every
situation.

>A world that relies on trade is a world at peace.

again, big stretch. Just for example:

[http://www.economist.com/news/books-and-
arts/21578978-world-...](http://www.economist.com/news/books-and-
arts/21578978-world-1913-was-worryingly-similar-world-today-year-sky-fell)

"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. "

~~~
vidarh
> "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...

------
shearnie
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
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.

~~~
thaumasiotes
> As a result once Australia's mining boom is over there will be nothing for
> future generations.

South Korea was traditionally (mid-20th-century) viewed as cursed by a lack of
natural resources. In this sense, it has already reached the phase of "nothing
left for future generations". What's so bad about this?

~~~
w1ntermute
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.

~~~
nl
_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]

Hmm. Stereotypes, hey?

[1] [http://www.theage.com.au/news/national/give-us-a-break-
austr...](http://www.theage.com.au/news/national/give-us-a-break-australia-is-
hard-at-work/2005/07/06/1120329502555.html)

------
angersock
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.

~~~
abhiv
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.

~~~
nisse72
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.

------
NTDF9
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.

~~~
Houshalter
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.

~~~
adventured
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.

------
bdcs
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...](http://www.npr.org/blogs/money/2011/09/06/140110346/how-to-avoid-the-
oil-curse)

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

~~~
discardorama
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...](http://pri.org/stories/2012-06-06/norways-example-oil-and-gas-boom-
done-right)

~~~
hansjorg
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...](http://www.ft.com/intl/cms/s/0/99680a04-92a0-11de-b63b-00144feabdc0.html#axzz2pz6wTL3K)

------
lafar6502
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.

~~~
adventured
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.

~~~
e12e
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.

~~~
adventured
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.

------
luckyno13
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.

------
woodchuck64
"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
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.

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

~~~
Geee
It's accurate measure for the supply side of the markets. If that number
reaches 0% then there isn't any available workforce and wages rise sky high.

------
JoeAltmaier
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
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!)

~~~
lazyjones
> _Their foresight is in saving it instead of spending it immediately_

Not only that, but also in establishing a national oil company instead of
privatizing everything to funnel profits to some large corporations.

I'd like to know how they manage to prevent corruption in these areas, in
Austria (where I live) it's quite common to rob the taxpayer blind and line
politicians' pockets while privatizing assets.

~~~
cobrausn
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.

~~~
jfb
It's likely the case that Norwegian civil society would have been strong
enough to produce good results regardless of the model.

------
camus2
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
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.

------
Kiro
What would happen if they started spending all the money?

~~~
Expez
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.

------
netman21
Australia, in the 1980-90s established a social welfare retirement fund. It is
now worth more than their GDP!

~~~
femto
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
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...](http://www.humanrights.gov.au/publications/gender-gap-retirement-
savings)

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

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

------
return0
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.

~~~
geoka9
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
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]).

~~~
eru
On the other hand, high oil prices also lead to more oil exploration.

