Posted on 07/12/2007 1:31:21 PM PDT by WesternCulture
Norway has more millionaires, measured in US dollars, than any other country in the world in terms of its size.
(Excerpt) Read more at aftenposten.no ...
Two questions that some people would ask in connection to this article:
1. “ISN’T THIS JUST BECAUSE NORWAY HAS OIL?”
My answer;
- Not only. Oil is, to some extent, the explanation behind the prosperity of Norway, but lots of other countries have oil. Still, most of them are very poor compared to Norway.
For instance, have a look at Libya, a country with a population roughly about the size of Norway’s (Nor: 4,5 million, Lib: 5,67 million). Libya has lots of oil too, they also discovered their oil earlier than Norway did and most of it is easier to access than the Norwegian oil reserves. Speaking of national oil (including gas) reserves, Norway does not rank in the global top ten in this department. Libya does. Furthermore, just like non-EU member Norway, Libya is situated very close to The EU, the largest economy on earth. The transport costs for shipping their oil, petroleum and gas to this giant market are just as low as those of Norway. In similarity to Norway, Libya has also enjoyed peace and political stability since the end of WW2 (with the exception of Gaddafi’s rather peaceful 1969 coup d’état).
Despite all of this, Libya isn’t rich. The (nominal) GDP/capita of Norway is almost NINE times that of Libya!
A country needs more than oil to build real prosperity.
It needs a friendly business climate, high quality education, well functioning authorities and institutions, good infrastructure, healthy work ethics, respect for law and order etc, etc. Contrary to many other nations, Norway is a model nation in this respect, although it has its flaws like countries societies do.
But apart from oil and a well functioning society in general, Norway is also in the possession of a very succesful shipping business, a profitable fishing industry and has also been succesful like few other nations on the international financial markets. Norway is also rich in forests and minerals and contrary to what a lot of people are aware of, Norway also has a very expansive manufacturing industry. Despite being a very egalitarian culture with a great deal of state ownership (for instance, the government controls 31% of the publicly listed companies), the Norwegians seem to know something about capitalism and investment.
2. “SO, DO NORWEGIANS ENJOY THE HIGHEST STANDARD OF LIVING IN THE WORLD?”
My answer:
I’m not so sure. According to The IMF, the Norwegian nominal GDP per capita is second only to that of Luxembourg and the GDP per capita at purchasing power parity is the third highest in the world (Norway ranks behind Luxembourg and Ireland and is just slightly ahead of the US in this field). Norway sure looks rich.
However, a great deal of the national oil incomes of Norway (most of the incomes from the oil industry go directly into the pockets of the government as it controls both of the country’s large oil producers; namely Statoil and Norsk Hydro. These two companies are presently going through a merger) is not used for consumption, instead a lot of these incomes are placed in a national sovereign wealth fund. One of the reasons for this is that the Norwegians are afraid of economical overheating. While Norwegians are richer than most other nations as such, it ought to be noted that individual Norwegians hardly enjoy a standard of living that dramatically exceeds those of other rich countries like Switzerland, Sweden, Denmark and The US. Norwegian wages are very high compared to most other countries, but a lot of things are also much more costly. For instance, many cars cost twice as much in Norway as they do in neighboring Sweden (my home country) and although houses/apartments/condos are not much more expensive if we again compared Norway to Sweden, most people would probably say Swedish building standards has been superior those of Norway since 1905, when Norway became independent from Sweden. The same goes for roads and most other aspects of infrastructure.
However, if the development of Norwegian ‘oil funds’ continue to be favorable, it might prove to have been an intelligent decision not using these money for sheer consumption.
About the Norwegian sovereign wealth funds:
( Source: http://en.wikipedia.org/wiki/Norway )
“By January 2006, the Fund was at USD 200 billion, representing 70% of GDP in Norway. During the first half of 2007, the pension fund became the largest fund in Europe, totaling about USD 300 billion. Already (April 2007), Norway has the largest capital reserve per capita of any nation. Projections indicate that the Norwegian pension fund is set to become the largest capital fund in the world. Conservative estimates tell that the fund may reach USD 800-900 billion by 2017. Other natural resource-based economies (examples: Russia and Chile) are trying to learn from Norway by establishing similar funds.”
In any case; hats off and congratulations to Norway, one of the richest and most beautiful countries on earth!
What about Zimbabwe?
they mean per capita right? cant be the most millionaires numberwise.
News Flash: Senator Nancy Pelosi announced today her intent to push through a bill to tax Norway's millionaires. She said in her comments today at the Capitol, "The rich have never paid their fair share in taxes, and Norway has yet to contribute their fair share to the general welfare of the world." She went on to say that she admires Norway's citizens, and she hopes that some of the additional taxes will go to ensuring that no more Norwegian citizens starve or die of hypothermia during the winter months.
“When questioned about how Senator Pelosi planned on taxing a foreign country’s citizens, she responded, ‘Millionaires the world over have benefited from doing business with the United States, and it is high time those bastards paid us for the privilege.’”
Yes, it’s per capita.
“As I suggested yesterday,after a recent trip to Ireland and England I’m stunned by how expensive those two countries are.If they’re typical of the cost of living in Europe I’d say that one million dollars buys a *lot* less
there than it would in the USA.”
- I don’t know about Ireland (I haven’t been there), but I agree the UK is expensive. I would say Germany is a cheaper place to live and to visit, even though wages are more or less at the same in Germany as in the UK.
Things I experience as cheaper in Germany compared to The UK is especially prices of eating out, groceries, alcohol, hotel rooms, clothes and getting around by public transportation.
I guess the US is even cheaper than Germany in these aspect.
I guess the US is even cheaper than Germany in these aspects.
The total cost of living in a country for a LONG time depends on many factors. If you’re a healthy, single individual, working as a highly educated proffessional, The US probably offers the best standard of living.
If we are talking of a man and a wife who are both working around 40 hours a week with average incomes, who whish to send their two kids to university, Scandinavia is perhaps a better place to live in than the US. Especially if they have average needs of health care as well as child care and wish to retire in the country where they live.
And my ancestors thought they’d find their riches in America....dang it!
“And my ancestors thought they’d find their riches in America....dang it!”
- America is still one of the best places to get rich in and has been among the wealthiest countries in the world for a much longer time than Norway has.
Personally, I’m very optimistic about the economic development of both Norway and the US. Despite the fact that these countries are different in many ways, they also have many things in common;
- a great sense of national pride
- a strong engagement in economy, financial affairs and
entrepreneurship
- a healthy business climate
- (in relation to populations) scores of well educated
professionals
- belief in traditional work ethics
Some people claim Norway is a Socialist nation. In a sense this is true, but it’s also a country where people believe in doing business, take pride in what they do for a living and keep a close eye on the development of the world’s financial markets.
The way our dollar has fallen the last few years (relative to other major world currencies), there’ll soon be a hell of a lot more Canadians, Brits, Aussies & western Euros who’ll be millionaires (in terms of U.S. dollars)...
I'm a billionaire, measured in Zimbabwe dollars.
“This is particularly striking given the sharply progressive income taxation that I assume prevails in Norway. But this NYT article (pdf) suggests that living standards are a little harder to judge, and that Norway doesn’t come off so well in some respects. (They are in this piece contrasted unfavorably to Spain.)”
- I’ve read that article before and I think it touches on many of the aspects of Norwegian society ordinary Norwegians are dissatisfied with.
So far so good, however, to me it seems like Bruce Bawer (the author) compares Norway to some of the wealthiest parts of the US, like NYC, where he is from. But NYC is not The US. NYC wages, especially those of people working in Manhattan, are clearly higher than ordinary wages of the US as a whole.
I guess Bawer is right in saying that Americans drive better cars than Norwegians.
Bawer writes:
“And they drive around in wrecks. In 2003, when my partner and I took his teenage brother to New York - his first trip outside of Europe - he stared boggle-eyed at the cars in the Newark Airport parking lot, as mesmerized as Robin Williams in a New York grocery store in “Moscow on the Hudson.””
In the parking lot of more or less ANY airport of some importance, you’ll find more expensive cars than in average neighborhoods of that particular country. This is because many flight passengers as well as airline and airport staff often earn good wages. Pilots, well paid proffesionals who often travel by plane and people who can afford vacations abroad often are people who can afford expensive cars, it’s as simple as that. The best selling car in the US is the Toyota Camry. A good, affordable and reliable car, but hardly one that would make any Norwegian “stare boggle-eyed”.
Bawer is prone to exaggeration; his book on Islam in Europe, which I read, was a particularly bad example. But I think there is a lot to what he says, because in Scandinavia private consumption is discouraged for the sake of public services. And one of the things about airports is that air travel in the US got much cheaper after deregulation, so that flying became more succcessful. (As I understand it Ryan Air has recently had this effect in much of Europe.) The very poorest don’t fly much, but other than that those who fly are a pretty good cross-section of society, I suspect.
- I kind of get this impression too. It would be amusing watching a “documentary battle” between Bruce Bawer and Michael Moore consisting in Bawer trying to prove that Scandinavia/Norway is the worst place on Earth to live, while Michael Moore was trying to prove the same thing regarding the US.
“But I think there is a lot to what he says, because in Scandinavia private consumption is discouraged for the sake of public services.”
- I wouldn’t say it’s discouraged in general, at least not in all of the Scandinavian countries, but it’s true that car consumption is discouraged in Norway and also that fuel consumption is discouraged in most European countries.
Furthermore, Norwegians invest a lot of their oil incomes in sovereign wealth funds (see my first commentary to the article above), instead of using it for private consumption, therefore you could say private consumption is discouraged in Norway (but not so much in the rest of Scandinavia). However, it’s not for the sake of public services, instead they do this because they are afraid of the economy overheating. Many Norwegians, as well as others, would say BOTH private consumption and the quality of public services are far below the levels of what Norway, in theory, could afford. Norway is extremely rich, but a great deal of this wealth is tucked away in funds.
“And one of the things about airports is that air travel in the US got much cheaper after deregulation, so that flying became more successful. (As I understand it Ryan Air has recently had this effect in much of Europe.) The very poorest don’t fly much, but other than that those who fly are a pretty good cross-section of society, I suspect.”
- I agree that most people in Europe as well as in The US seem to have enough money to fly a lot. For instance, my former girlfriend from Italy and I could easily visit each other’s countries (I live in Sweden) as a flight between Gothenburg (where I live) and Rome (where she lived) costs appr $50, which is very affordable to an average Swede or an average Italian. I people who fly sometimes a year probably represent a cross-section.
Yet, I doubt the cars at the parking lot of Newark Airport represent a cross-section of the cars US Americans drive around in. To begin, with NYC inhabitants are considerably richer than the average American. Another thing is that Newark Airport (according to Wikipedia) “..is the fifth busiest international air gateway to the United States..” This means there are a lot of people who travel ABROAD from Newark on business trips and on fancy holidays to countries outside the US (and return from such trips). Many average Americans also travel abroad, but not as frequently as comparatively wealthy Amerians.
The problem with the way Bawer writes is that less aware people are led to believe that average Americans drive way better cars than Norwegians. The truth is, Americans probably drive better cars than Norwegians, but the average American car is not a vehicle that would seem like a luxury car to a Norwegian, which is indicated by the article.
I was thinking only in terms of the high levels of taxation, and of government spending as a percentage of GDP, that seem to prevail in that part of the world. High VAT and income taxes would necessarily prevent people from spending much of their income on private consumption, and they would take it instead as public services.
“High VAT and income taxes would necessarily prevent people from spending much of their income on private consumption, and they would take it instead as public services.”
- Perhaps you’re just saying that in case education, child care and health care are public instead of private services, these services goes into the ‘public service consumption bag’ instead of the ‘private consumption bag’. If so you could stop reading now as I’ve finally managed to get your point. :-) :-)
But, just in case:
To begin with, let’s do away with the idea that people consume more of things that are offered us as free or low cost public services in Scandinavia. We don’t study some extra years at university just for fun and neither do we let our children stay longer at the kindergarten just because these services are very cheap over here.
I fail to see that our private consumption is ‘held back’ just because we finance health care, elderly care etc through taxes instead of consulting a private business working in this field. In the case of Scandinavia, people who work in these areas are very competent and responsible.
Competition is necessary in many fields, I am deeply convinced market economy is more efficient than Socialism in general, but I would also say different things motivate people who work as doctors and people who sell Plasma TV’s.
It would be just as natural to claim that because of the fact that the government (via the high Scandinavian VAT and income taxes to a great extent) provides a Scandinavian family with free (or very low cost) education, health care etc they can use a larger percentage of their incomes for consumption of powerboats, nice pottery and Volvo’s.
However, both these assumptions are wrong. At least in theory.
Let’s talk practice then (below, I’ll compare Sweden to the US without involving the other Nordic countries);
Advocates of ‘The Swedish Model’ claim our system is better in terms of creating high standards of living than ‘The American Way’. People who are strong believers in ‘The American Way’ say it is more effective in this area.
National standards of living is something I happen to be interested in. I’d not call myself an expert, but I have studied the subject to some extent.
I fail to see that ‘The Swedish Model’ is superior to ‘The American Way’, BUT I also fail to see that ‘The American Way” is better than our system.
According to IMF, the nominal GDP/capita of The US is $44,190 while its Swedish counterpart is 42,383. If we instead measure in GDP/capita at purchasing power parity, the Swedish GDP/capita is considerably lower than that of the US. You get this result because Swedish consumer prices are higher than they are in the US. This, however, is largely due to our very high VAT. Here comes the most important part: Swedes get very much in return for those money in terms of high quality health care, education (university education included), child care, elderly care, low cost public transport etc. THIS IS NOT ACKNOWLEDGED BY THE GDP/CAPITA AT PPP MEASUREMENT.
Therefore, my conclusion is that the NOMINAL GDP/Capita measurement is a more suitable instrument for getting a rough idea of how US standards of living compares to those of Sweden.
IF I am right in assuming this, it would mean that both societal concepts are about as effective in the area of producing wealth and allowing high levels of private consumption.
IF I’m right, it would also explain why I see so many nice houses and premium/luxury cars if I look out of my window (and I don’t live in a rich area by Swedish standards - sooner a middle class/lower middle class area - but by average European standards, it’s comparatively wealthy).
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