Heaven has FjordsPosted: May 14, 2009 | |
When ever I hear folks rant and rave on the evils of European Social Democracies and how horrid they are, I always ask them to name the country that comes up consistently with the highest literacy rates in the world, lowest infant mortality, and much higher the the USA GDP per capita, and at the same time has what you would probably call the world’s most complete cradle-to-grave welfare state. Of course, no one knows the answer because so many folks here have been brainwashed into thinking productivity, budget surpluses, high standards of living, and great education and health care are not possible in socialist states. Well, they are really wrong.
Without a doubt, the best country to live in the world these days going strictly by the statistics (and not the weather) is Norway. Take a look at the CIA fact book for all the good stuff on Norway then take a look at the United States. Norway has bested the USA in standard of living for quite some time. The United States keeps dropping on all lists and just in GDP per capita is now sitting at number 10. Norway is ranked first on the Human Development index of 177 countries, so essentially they are number one country for living the good life. It is second, only to Luxembourg, for GDP per capita.
Today’s New York Times covers the little country that can and its stellar economic performance in today’s global economic crisis. A lot of credit is goes to Norway’s socialist finance minister Kristin Halvorsen. She’s in charge of Norway’s $300 billion sovereign wealth fund that has been steadily buying stocks since March and is used to build a decent standard of living for every one in that country. Norway likes its government and its government works well. The Times article contrasts the economics of the U.S. and Norway and the U.S. comes up way short.
And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent and its ledger is entirely free of debt.
By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy.
Norway is a relatively small country with a largely homogeneous population of 4.6 million and the advantages of being a major oil exporter. It counted $68 billion in oil revenue last year as prices soared to record levels. Even though prices have sharply declined, the government is not particularly worried. That is because Norway avoided the usual trap that plagues many energy-rich countries.
Instead of spending its riches lavishly, it passed legislation ensuring that oil revenue went straight into its sovereign wealth fund, state money that is used to make investments around the world. Now its sovereign wealth fund is close to being the largest in the world, despite losing 23 percent last year because of investments that declined.
Did I mention their banks are healthy, their real estate market is still okay, and they trade oil for leisure?
Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country’s G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies.
As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise.
Unlike Dublin or Riyadh, Saudi Arabia, where work has stopped on half-built skyscrapers and stilled cranes dot the skylines, Oslo retains a feeling of modesty reminiscent of a fishing village rather than a Western capital, with the recently opened $800 million Opera House one of the few signs of opulence.
Norwegian banks, said Arne J. Isachsen, an economist at the Norwegian School of Management, remain largely healthy and prudent in their lending. Banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that brought down their Icelandic counterparts. But they certainly have not closed their doors to borrowers. Mr. Isachsen, like many in Norway, has a second home and an open credit line from his bank, which he recently used to buy a new boat.
Some here worry that while a cabin in the woods and a boat may not approach the excesses seen in New York or London, oil wealth and the state largesse have corrupted Norway’s once-sturdy work ethic.
“This is an oil-for-leisure program,” said Knut Anton Mork, an economist at Handelsbanken in Oslo. A recent study, he pointed out, found that Norwegians work the fewest hours of the citizens of any industrial democracy.
Many folks in the USA clearly misunderstand the difference between a socialist economy in the mold of the old USSR
and countries that are socialist democracies. Many have higher standards of living, higher levels of education and public health, more economic and civil liberty, and higher levels of productivity and per capita production than the United States. If you look at the economy from the view of the Norwegian central bank (their version of the Fed), things look pretty good in comparison to the rest of the world.
For example, here’s a link to the program that will be instituted starting on May 18th that will let banks swap any toxic mortgages backed assets for a set of government insured securties. Quite a different approach than what is being take here in the U.S. where we pour money into banks and get hybrid stock that may or may not be worth anything in the future. Norwegian banks aren’t having nearly the issues as U.S. banks. Even though Norway’s housing prices boomed in a similar pattern to other Western nations, Norway’s banks are prudent lenders as a rule. They only got tripped up in a few of those U.S. financial innovations. The government is mopping those up as quickly as possible.
While Norway is a huge producer and exporter of gas, they are investing in green technology, notably electric cars. Their economic stimulus plan included placing 5000 charging stations. Here’s a very intersting article about Think. Who says that country’s like Norway can’t attract capital and entrepreneurs?
Three pinstriped London investors stand outside an electric car factory in the green fields of the Norwegian countryside, waiting their turns to test-drive a stylish two-seater called the Think City.
But first, Think CEO Jan-Olaf Willums takes the wheel. While the moneymen fiddle with their BlackBerrys, Willums, looking slightly rumpled like the academic he once was, turns the ignition, and the stub-nosed coupe silently rolls toward an open stretch of pavement. Suddenly he punches the pedal, and the car takes off like a shot, the AC motor instantaneously transferring power to the wheels. The only sound is the squealing of tires as Willums throws the little car into a tight turn and barrels back toward his startled guests.
You know I’d really like post more on this, but to tell you the truth, I’m too busy look at the help wanted ads on the Norges Bank site. Gee, don’t you think we should all just keep on demonizing socialism? We wouldn’t want to end up like Norway, afterall.