Friday, May 15, 2009

Norway's Economy is Booming


NY TIMES -- In the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3%. The government enjoys a budget surplus of 11% 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% of its GDP and push its total debt to $11 trillion, or 65% of the size of its economy.

MP: Norway's current unemployment is only about 3% vs. 8.9% in the U.S., see chart above.

22 Comments:

At 5/15/2009 8:55 AM, Blogger Niklas Blanchard said...

So the economics lesson from Norway:

1. Be a very small country.

2. Have oil.

 
At 5/15/2009 9:18 AM, Blogger Jeff Herron said...

Although Niklas's comment seems to be somewhat tongue-in-cheek, I think there is something to the benefit of being small. The US is simply to large to govern effectively as a single entity.

If you go back and re-read the US Constitution, you'll see that it was actually never intended to be governed as a single entity, except in a few select matters.

Of course, being resource-rich never hurts...

 
At 5/15/2009 9:28 AM, Anonymous Anonymous said...

The U.S. has plenty of oil, coal, natural gas and other resources. The problem is, that we also have Democrats.

 
At 5/15/2009 9:37 AM, Blogger Colin said...

Norway's economy is set to shrink by 1.9% this year:

http://news.bbc.co.uk/1/hi/business/8051871.stm

It's definitely good to have oil.

 
At 5/15/2009 9:53 AM, Anonymous Janet said...

Drill .1% in Anwar province in Alaska and we will have enough only to meet our demands, people will be able to afford the gas to put in the vehicles THEY want to buy (and not what the government says they SHOULD buy) and the American auto industry will re-bound. If only the Democrats were taken out of the equation, this country could prosper once again.

 
At 5/15/2009 10:07 AM, Anonymous gettingrational said...

Oil wealth is great (duh) but Norwegians are savers anyway so fiscal responsibility and frugality are basic. Washington Mutual (WAMU) was built into the largest savings insutitution in the U.S. in large part because of it's base of Norwegian immigrant savers.

Of course this high savings rate was defeated by greedy management lending to negative net worth borrrowers. From what I am observing the legacy depositers are now being "Chased" away!

 
At 5/15/2009 10:18 AM, Blogger Paul said...

"The U.S. has plenty of oil, coal, natural gas and other resources. The problem is, that we also have Democrats."

Just so you're aware,anonymous, I am going to steal that line.

 
At 5/15/2009 10:27 AM, Anonymous Anonymous said...

Not to turn this into a political argument but...
The problem are democrats?

Have you guys been living in the USA the last 8 years? It's been fabulous hasn't it?

 
At 5/15/2009 10:35 AM, Blogger Bill said...

Niklas: The takeaway here is clearly that it is good to have a government which exercises fiscal discipline. Large government budget deficits harm the economy. Being a micro-nation is a not a large factor in economic growth here as any resident of Iceland would tell you. Possessing oil reserves is important but it is not controlling either. Think of all the large oil producing names whose economies are in the tank.

 
At 5/15/2009 10:36 AM, Blogger Paul said...

"Have you guys been living in the USA the last 8 years? It's been fabulous hasn't it?"

Yeah, Bush spent too much on failed Liberal programs, no doubt. But if we're talking about resource extraction then absolutely, the problem is Democrats.

 
At 5/15/2009 11:33 AM, Blogger fboness said...

"Have you guys been living in the USA the last 8 years? It's been fabulous hasn't it?"

It's been OK if you are living in a city or state not run by Democrats.

 
At 5/15/2009 11:39 AM, Anonymous Ralph Short said...

There is no doubt Bush spent too much money on giveaway programs but based on the 1st hundred days of Obama Bush looks like a piker. At the same time Bush attempted to free up Anwar, he allowed oil leases to be let in the west which has now been blocked by Obama, and they approved permits for new coal fired plants to generate electricity which also has been reneged on by Obama.

The bottom line is Obama is the biggest spender in history and none of it is going to resource extraction or for the creation of wealth.

Now, here is the kicker from Bloomberg news he apparently is telling us proflgate government spending has got to stop. Huh??http://www.bloomberg.com/apps/news?pid=20601087&sid=aJsSb4qtILhg&refer=worldwide

 
At 5/15/2009 11:43 AM, Blogger Billy said...

Here is a key line:

"Eirik Wekre, an economist who writes thrillers in his spare time, describes Norwegians’ feelings about debt this way: “We cannot spend this money now; it would be stealing from future generations.”

 
At 5/15/2009 12:07 PM, Blogger Walt G. said...

Do we want to copy a country where a 32-year-old drug addict gets $1500 a month from the government to feed his habit and has never held a job?

 
At 5/15/2009 12:23 PM, Anonymous Anonymous said...

Actually Norway has one of the highest levels of government spending in the world and an extremely interfering state in every aspect of economic life. It has very high tariffs protecting it's industry and of course it has opted to stay out of the E.U. Even the largest wealth producing activity (oil extraction) is almost entirely controlled by the state through the national oil companies. The social democratic party has ruled for most of the time after WW2.


Jim from Europe

 
At 5/15/2009 1:44 PM, Blogger vakeraj said...

This article is only a snapshot in time, without any reference to trends or consequences of policy. This "idylic" state won't last forever, and the following consequences of socialism in Norway will be severe.

 
At 5/15/2009 11:35 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 5/16/2009 3:41 AM, Blogger 1 said...

Personally I think this New York Times article is at best questionable...

It is after all the paper of Walter Duranty...

I think I have more faith in Nation Master's Big Mac Index, Business efficiency, and Economic freedom ratings than anything spilling from the Red Rag near the Hudson...

 
At 5/16/2009 7:38 AM, Anonymous Anonymous said...

What about Denmark which had an unemployment rate of 2% in 2008. It also has the highest GDP per capita in the world around 20% more than that of the USA.

Of course Denmark has the highest income tax rate in the world. Not only this but it's tax system is one of the most progressive in the world (it takes hard earned money from the productive members of the society and gives them to the parasites, Darwin would be disgusted). So Denmark has the lowest income inequality in the world, that is socialism at it's worst.

 
At 5/16/2009 2:26 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 5/17/2009 11:57 AM, OpenID yngvar said...

Norway keeps its tremendous oil income off the budget (and out of the national economy) by stashing it all in the off-shore Petroleum Fund, only allowing 4% of the 'profits' of the Fund to be siphoned off each year.

We've learned over the years, as a petro state, that fluctuating oil prices can wreck havoc on the economy and government budgets, so we now want to keep oil and gas out of the real economy.
And the real economy (as leading economic indicators point out) is doing great!

Walt G. said...
Do we want to ... never held a job?
It's a kickback to the druggies, Walt. We pay him to not rob us in the street, to not steal our car, or burglarise our home. Like insurance; paying the few, with money from the many.

Yngvar from Norway

 
At 5/19/2009 1:46 AM, Anonymous Anonymous said...

When I find a wallet of 500$ I turn it in to the Police lost and found. A study done a few years ago show that 75% of norwegians would atlest deliver it to the police, even though about 40% would take the money out first.

The point im making is that there is a shame in Norway assosiated with taking "free" money or services. Most people dont rely on getting help from the state, but are happy that they do. (this is generaly, so bringing up one example of the opposite proves nothing)

Second:
The low intrest rate in the US after the bursting of the dotcom bubble to avoid Bush looking like he was usless (no help there) basicly made you lose wealth if you saved, and this is a very importaint fact.

Capitalism requires capital, and no savings equals no capital. Anyone who argues otherwise would be ignorant.

Oil helps, but savings is king.

 

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