Wednesday, July 12, 2006

Norway Part 2 - Repost

As to be expected, when I got into an arugment with a leftist recently, the immediate knee-jerk reaction was that "Norway" rules.

You see, this is why this is an important post, because the left doesn't think. They don't research, they don't study, they just want free money and anything that maybe, sort of seems to support their cause, they will immediately herald as an example of "socialism" working.

So once again, I shall post this to remind all leftists that your darling children in Scandinavia, while impressive, are no rivals for the US. The only country that beats or rivals the US is Luxembourg and soon to be Ireland.

OK, closest we got was Doink looking up oil as a percent of Norway’s GDP for the latest year. Which was what I was trying to get at, but wanted a nice longitudinal chart which you’ll see below.

Going from practically nothing in 1971, oil now accounts for a full 24% of Norway’s GDP (although I speculate this high percentage has a lot to do with an increase in the price of oil recently and it’s traditionally more around 20%).

Regardless, what I did then was calculate Norway’s GDP per Capita going back to 1971 WITHOUT that evil capitalist abomination we all have learned to hate and which any good socialist would never associate themselves with or be proud of; oil.

And the results are what we’d largely expect. Norwegians only work about 75% as much as Americans, and thus when you take away their cash cow, they enjoy standards of living of roughly 75%.

This further confirmed something I’ve always suspected of Norway, and that’s if you took away the oil, they wouldn’t be materially different than any other Scandinavian country.

So aspiring and junior deputy economists, what’s the lesson to learn from all this?

That the next time you hear some leftist idiot start blathering on about how Norway has higher standards of living than the US and is proof positive that socialism works, you can once again, hit them upside the head with the truth and point out to them that, no in fact, Norway really doesn’t have higher standards of living and just happens to be lucky geologically…that and they should be ashamed for taking such joy in (GASP!) oil!


BradMan said...

So you took out the oil and re-graphed it... how about you take out the oil, and bump up their productivity to 100%, what would the picture look like then?

It could be that the culture of Norway is: "hey we have oil.. lets take advantage of this by not working as hard."

Maybe to them, the 25% more time on their hands is worth more then the capital they would in turn realize if they worked 100%.


captaincool said...

> 'Trust me, it's more like $4/hr they're making there.'

Err well no, the commonly used method includes PPP, I will trust the BBC and Mecer consulting over someone who has a blog

>'Luxembourg is the only real legitimate country that beats the US in standards of living'

Well per capita per hour shows France beats the US as well. So Luxembourg and france are the ONLY countries, ummm YES but the whole point is that US is not first.
Imagine the GDP of US if it had the same policies as Luxembourg!

Therefore left leaning governments out perform US(which also has large oil production like Norway).

You use GDP as measure and the US is not first, a left wing government run country is.

Captain Capitalism said...

Your lack of knowledge on economic statistics yet your insistence on making false statements to achieve an agenda is amazing.

Anonymous said...

Honestly, when i lived in Norway (for 7 years, starting in '94) there was no comparing the quality of life in the two countries. There wasn't even peanut butter over there until the end of 94, not that that is a statistical argument. However, even if per capita their income was the same as in the US, the cost of living is so much higher, the purchasing power that those in Norway have is much lower. Also, there is NO WAY that the productivity of norwegians would go up if you took away their oil, the socialist nature of the culture discourages excellence and any pride a person might find in working hard.

Captain Capitalism said...

Well, I don't know if I'd say just cause a country doesn't have peanut butter it is 2nd world status.

And while PPP adjustments aren't perfect, you truly thought Norway had much lower standards of living in terms of their purchasing power?

I'm curious in that I woudln't surmise a big difference in perceived standards of living. EXCEPT in the case they are taxed so highly, people's disposable income is so low, it SEEMS they have little purchasing power, yet at the same time, they have free health care and education.

gl said...

I live in Norway now, having spent 9 years in London and having grown up in Sydney, Australia. By comparison to London, where I felt I had very strong purchasing power (I earned something like 10 times the average salary), Norway has brought me back down to earth (well, sort of ... I will probably only earn 5 times the average Norwegian salary). Norway may be richer, but I can't go out for a meal nearly every night of the week here, as I could in London or Sydney, because it's just so expensive. Which is hardly surprising given the minimum wage of around US$8ph and extortionate taxes on alcohol. And I have had to fork out nearly US$60,000 for a 1.8 litre car, which would probably cost less than US$40,000 in most other European countries. I find most things about 25% more expensive in Norway than London ... and London is not a cheap place to live. But is life better here ? is there a "higher standard of living" ? I'd have to say yes. There is far less crime here than in the US or the UK. There is virtually no poverty (I wonder if there is a link here ...). Everyone is entitled to a decent education and health care. Social mobility is very high, as it used to be in Australia, and as it definitely is not in the US and the UK (if you're poor, you stay there ... unfortunately the American Dream is just that.. but don't tell anyone otherwise they won't work so hard !). People lead very comfortable lives here. So, they may not be able to buy peanut butter at the supermarket, but they can let their kids play in the streets and parks and enjoy the long summer evenings because they finish work a bit earlier than everyone else. Now you may think I'm some kind of "liberal" (US definition) or socialist/commie, but quite the opposite, I am a "liberal" (UK definition) in that I believe in free markets and general openess (I do NOT believe that there is no such thing as right or wrong, or in moral relativism etc) and I am a strong believer in the capacity of capitalism to do good in the world. What Norway (and the other Scandi/Nordic countries) have done is combine a solid social underpinning to a very liberal economy (in contrast to France and Italy, for example)... and it works. Sure, Norway wouldn't be as rich if it were not for the oil, but the last stats I read said that oil made up 12% of the economy. The thing is, they don't spend all that oil money here ... they just can't .. inflation would go through the roof. Instead they stick it under the mattress for a rainy day (The Petroleum Fund -, one of the biggest investment funds in the world .. and all invested offshore. It's been a long day .. I'm starting to lose track of what I was saying .. I guess in conclusion I'd say that the quality of life offered by the system up here far outweighs the economic benefits of increasing productivity from the 75% to 100% referred to in previous posts .. that extra 25% just isn't worth it.

Anonymous said...

Norway is not socialist, it is a market liberal country. Check index of freedom.

Yes, Norway has a large goverment, but so does the US. Norway can afford its social programs because the oil, the US will go bankerupt because of them. But countries need to be more capitalistic to survive the next 50 years.

Anonymous said...

I realize this is a very late comment, but I wanted to point out something rather important:

Norway does not SPEND its oil income. It is all put into a sovereign wealth fund, or tucked away for a rainy day if you will.

The whole standard of living is sustained off the non-oil economy.

evision said...