Farouk al Kasim saved Norway from its oil (2014)
psmag.com
psmag.com
https://news.ycombinator.com/item?id=19594153 (347 points, 129 comments)
https://news.ycombinator.com/item?id=28780108 (115 points, 81 comments)
Original 2009 article:
http://archive.today/2022.06.15-104752/https://www.ft.com/co...
As he passed a group of travelers going in the opposite direction, he overheard one of them saying "look at this cruel old man, riding in comfort while his son has to walk." Caring very much for the opinion of others, he got off of the donkey and told his son to ride.
He passed another group of travelers, and overheard one whisper "look at the silly old man, walking his life away while his young, strong son rides in comfort."
He tried riding behind his son, but overheard people criticizing his cruelty towards the overburdened beast. He tried having them both walk, and was criticized for not realizing that donkeys could be ridden.
Finally, in frustration, he ordered his son to help him carry the donkey. As they both struggled to lift the large and uncooperative beast, another group of travelers approached, staring at him in confusion. Before they could say anything, he shouted at them "Shut up, I don't want to hear it!"
And the notion that improving living conditions - Norway is already at or near the top of nearly every quality of life measure - increases fertility is directly the opposite of real life global trends.
It's good. I think it could _amazing_ if some of the political orthodoxy was reexamined.
As such, if you pour money in you will inherently drive up prices, and inflation is effectively equivalent to applying an extra tax on everyone.
The notion that you can just pour money in and improve everything works at a household level, but is just an incredibly naive view in terms of a national economy.
It's a balancing act.
At the same time Norway, like every other country in the world is heading for a demographic time bomb nobody knows how to prevent, and so holding back money to be able to pay for that without e.g. drastically cutting back pensions and the like matters. Especially given that the "oil fund" is technically a pension fund.
With respect to mortgages, home ownership in Norway is very high in part because buying a house is affordable to the average Norwegian, in part because Norway is one of only a very small number of countries to let you deduct mortgage interest from taxable income.
But make them too cheap for supply of housing to keep up and all you do is drive up the prices and you're back to square one. Another way of saying that: Housing will "never" be cheap, because if house prices drops or interest drops or salaries go up, people buy bigger/better placed houses. We're nowhere near the housing quality where enough people go "oh, my house is big enough / in the most perfect location, I won't bother moving" if they suddenly find they can afford much more.
Perhaps you could enlighten us about which services are lacking and how they are so much better in those countries that just spent the North Sea oil revenue internally?
Spend some of that money on training and paying more GPs, and you'd have my interest...
The UK and the Dutch just spent the money they got from the North Sea oil and at least the UK has little to show for it.
Anyway, the Norwegian economy is doing just fine without it, we bounced back from COVID faster than practically everywhere else and everywhere I look there are new commercial and industrial buildings going up.
The ideas that this decision can not be made in a hurry and that the spending can jump in size too quickly are reasonable. But the ones that there is absolutely nothing better to do with the money, and that most of it will be there in a large crisis when they need to withdraw are both ridiculous.
It’s why I was really sad to see the Canadian government give up on its Crown corporations. Sure, they got tens of billions of dollars for it. But that wealth took a really long time to acquire in the first place and the market cap of having a complete monopoly can’t have been priced in correctly (otherwise the private market wouldn’t have been all lathered up at the opportunity to take over).
There's plenty to criticize about the Norwegian economy.
The taxation of the oil wealth is definitely a great success story, but how that money is used from year to year is very much a mixed bag. We have per-capita public expenditures approximately twice those of Sweden. Average household debt at 114% of income, third place globally. We don't build housing, same as California.
Oil money contributions to the national budget were approximately $6500 per capita in 2022, and on top of this we have a total taxation percentage on the order of 40% of income on average, if you do the honest calculation and look at all payments to the governments.
In addition we have an energy production infrastructure that's nominally almost 100% publicly owned, but now sell electricity to citizens at EU prices (~300% markup) with the surplus going into public budgets - this is additional taxation we're not talking about.
It could be worse and there are many things going right, but selling Norway as an unquestionable economic success story doesn't completely reflect reality.
My pet peeve about Norway and oil: How very few people ever call them out on being the Saudi Arabia of the north (well, minus the murders/various other kinds of oppressions).
They do so much (excellent!) PR that shows them being the ethical/environmental leaders.. that totally ignores the fact that they are the people making money on pumping old fossil remains out from their seabeds. If they really meant it, they could, like.. stop doing that? I mean, pick a lane.
(Here's the complete picture regarding the grid:
https://en.wikipedia.org/wiki/Synchronous_grid_of_Continenta...)
There are power cables between RG Nordic and RG Continental Europe/RG Baltic/RG GB but to my knowledge they are all via high voltage DC - so not AC phase synced.
It's a difficult topic. It's probably a net win for Norway, as we can produce when price is high, and stop our hydro and import when prices are low. The problem is just that the benefit ends up making the government and the electric producers (again owned by government orgs mostly) rich, but us people have to pay more for our own energy use. So using that extra money earned to help the people is needed.
I wonder why RG Nordic is not linked up with continental Europe.
And while stopping the pumps would probably wreak havoc on our economy, we could at least stop looking for new fields while emptying the ones we have for some more years. So slowly wean off the oil tit. But every time that's suggested, the government says "develop, not stop". And use straw men like "we can't stop abruptly!!", even though that's not the suggestion on the table. And they've used the same excuse for a decade to not do anything. If we actually started transitioning away from oil a decade ago, we would be better off. And if we at least started now we would be better off. But that can just gets kicked down the road.
I can't really blame the Norwegians though - even if they care about the environment greatly, it would be hard for anyone to have a lifestyle based around their $250k income and to go back to a lifestyle based around having more normal $50k income.
It's quite simple - they should pick one: stop pumping up old fossil remains to sell to keep up their luxurious lifestyle or stop bragging about how clean they are.
In my opinion, a lot of people in the comment section don't get that there is a somewhat real concern that the abundance of oil revenue has made Norwegians less ambitious and innovative in comparison to what they could have been with that kind of a world-class education system, in comparison to its neighbours. And the greenwashing of the Norwegian oil industry is actually a real thing too.
The "starve the beast" strategy did not work for the Reagan tax cuts and it will not work for energy.
Criticizing us for climate profiteering, or even war profiteering, as some European voices have done, is extremely intellectually dishonest coming from Sweden, which followed suit to Germany and shut down more than 1 GWh of nuclear energy generation capacity during an ongoing climate gas emission crisis.
without trashing the NORWEGIAN environment, but let's not whitewash over all of the CO2 they have unleashed on the world.
More generally, I think it will be interesting to see what happens next with Norway - while they have avoided the principle resource curse - what happens when all of these oil jobs disappear (10% of direct employment and probably up to 25% in an indirect sense)?
People are too quick to blame "state-owned monopolies" when the development and success of any producer is dependent on the gatekeepers of the global oil marketplace.
And then there's Norway. The sole exception.
But, one wonders why a very rich society would need to resort to enslaving people in order to save a buck.
Also, I’m not sure how much has changed since I left that part of the world, but for decades the blue collar workers (Filipinos, Indians, Pakistanis, etc.) were considered lower tier class in rich Gulf countries. Probably easier to exploit those who one feels are less deserving.
I don't understand why we Europeans are so invested into the US economy when every American on twitter/reddit is saying the US dollar and economy is about to collapse. They might be wrong and are probably wrong but it is still incredibly stupid to invest in a country when its own citizens think it will collapse in a year or two.