Opinion

Felix Salmon

Norway, entrepreneurial paradise

By Felix Salmon
January 20, 2011

Max Chafkin has a fantastic story in Inc magazine about how to structure an economy so as to encourage entrepreneurship, full employment, and general happiness and contentment, all while drastically reducing inequality. It’s easy, in fact: all you need to do is become Norway.

There’s loads of great stuff in this piece, and I’d encourage you to read the whole thing. But a few things stand out.

Chafkin starts with the tale of Wiggo Dalmo, an industrial mechanic with a high-school education who chafed under his bosses, set up his own shop, and is now running a $44 million company with 150 employees. That’s the kind of story which should be common in the US but is in fact rare. But ask yourself: in the US, how much would such a person be paying in taxes? Dalmo paid $102,970 in personal taxes on his income and wealth last year, which is probably lower, not higher, than the CEO of a $44 million company would pay in taxes in the US.

The reason is that there’s much less income inequality in Norway. With a strong social safety net, the downside to starting a company and failing is small. As a result, entrepreneurship isn’t a lottery, so much as a lifestyle choice. If you succeed, you’ll get to run a large and successful corporation. But you probably won’t pay yourself a monster income.

Why not? Well, for one thing, you won’t need to pay yourself a monster income, since things like healthcare and college education — even through grad school, even outside the country — are covered by the state. Another part of the reason is that income, in Norway, is a matter of public record. And then there’s the fact that money which would otherwise be going to the top of the pyramid is instead going to the bottom, where it does much more good:

In a country with low unemployment and generous unemployment benefits, a worker’s threat to quit is more credible than it is in the United States, giving workers more leverage over employers. And though Norway makes it easy to lay off workers in cases of economic hardship, firing an employee for cause typically takes months, and employers generally end up paying at least three months’ severance. “You have to be a much more democratic manager,” says Bjørn Holte, founder and CEO of bMenu, an Oslo-based start-up that makes mobile versions of websites. Holte pays himself $125,000 a year. His lowest-paid employee makes more than $60,000. “You can’t just treat them like machines,” he says. “If you do, they’ll be gone.”

Incentives matter, of course. But not all incentives are purely financial. And there are serious problems with the US system where the incentives seem to be structured so that a large number of people are competing to become one of a very small number of monster success stories — multi-millionaire startup founders, or sports stars, or CEOs. Most of us, it turns out, have problems with the idea of playing that kind of lottery. As Chafkin reports:

I also became convinced of this truth, which I have observed in the smartest American and the smartest Norwegian entrepreneurs: It’s not about the money. Entrepreneurs are not hedge fund managers, and they rarely operate like coldly rational economic entities. This theme runs through books like Bo Burlingham’s Small Giants, about company owners who choose not to maximize profits and instead seek to make their companies great; and it can be found in the countless stories, many of them told in this magazine, of founders who leave money on the table in favor of things they judge to be more important.

There’s a lot of talk, in the US, about how small businesses are the engine of employment growth — something we clearly desperately need. And it looks like Norway has cracked this nut: it leads the world in the creation of small businesses, and it has just 3.5% unemployment, not to mention essentially zero poverty.

Raising taxes on small businesses in and of itself won’t help the rate of small-business creation — but it’s actually unlikely to hurt it that much, either. (And interestingly, taxes paid by an employer in New York are actually higher than those paid in Norway.) What would help would be a much stronger social safety net, so that someone who starts a company doesn’t need to fear a life of poverty in the event that she fails. Encouraging small businesses necessarily means encouraging failure — but the cost of failure is very high, in the US. Instead, we spend far too much time worrying about tax rates on the successful.

There is precious little evidence to suggest that our low taxes have done much for entrepreneurs—or even for the economy as a whole. “It’s actually quite hard to say how tax policy affects the economy,” says Joel Slemrod, a University of Michigan professor who served on the Council of Economic Advisers under Ronald Reagan. Slemrod says there is no statistical evidence to prove that low taxes result in economic prosperity. Some of the most prosperous countries—for instance, Denmark, Sweden, Belgium, and, yes, Norway—also have some of the highest taxes. Norway, which in 2009 had the world’s highest per-capita income, avoided the brunt of the financial crisis: From 2006 to 2009, its economy grew nearly 3 percent. The American economy grew less than one-tenth of a percent during the same period. Meanwhile, countries with some of the lowest taxes in Europe, like Ireland, Iceland, and Estonia, have suffered profoundly. The first two nearly went bankrupt; Estonia, the darling of antitax groups like the Cato Institute, currently has an unemployment rate of 16 percent. Its economy shrank 14 percent in 2009.

You can’t blame all of Estonia’s problems on its low taxes, of course — the currency issue (Norway’s kroner is floating, while Estonia just joined the euro) is also huge. And Norway does have all that oil revenue, too. But looking at Estonia’s housing bubble and bust, one sees an economy where people are striving to get rich quick, in contrast to Norway’s culture of simply trying to be as happy and successful as possible. Which turns out to be extremely successful.

Comments
47 comments so far | RSS Comments RSS

Point taken, but Norway is half the size of Texas with a population equalling that of the Dallas metroplex. You brush aside oil revenue and you don’t even discuss population, land area, and scaling-up such an economy. Aren’t these pretty important?

Posted by james2121 | Report as abusive
 

Felix….come on. 1033 word article on the Norwegian economy and all you can say is “And Norway does have all that oil revenue, too.” in the third to last sentence. They are the 5th largest Oil and 3rd largest global gas producer…bury the lead much? *source Wikipedia

GDP (nominal) per capita of Norway = $88,000
GDP (nominal) per capita of Estonia = $14,000
GDP (nominal) per capita of United States = $46,000

(source – Wikipedia)

Posted by rfreeborn | Report as abusive
 

Norway’s energy reserves must be among the largest in the world on a per capita basis. Norway also has a huge sovereign wealth fund. True, Norway has done a fine job managing its wealth, and Scandinavia has a long history of strong social safety nets, but it’s easy to avoid tough political and economic choices when your country has won the natural resources lottery. Not a compelling object lesson for this country, I am afraid.

Posted by EpicureanDeal | Report as abusive
 

Commenters above have done a good job pointing out the obvious missing items in the article, not to mention Norway is a tiny homogeneous population.

Felix has good point about NY though, I worked out that the effective tax rate for someone earning 150k living in NY is greater than 50%, generally higher than Euro zone countries (and at least they get base health care and better SS).

I wish more folks would realize what a poor return on investment we receive for all the tax dollars we pay, and the fact that if you live in certain states, you are already paying a higher tax rate than ‘socialist’ europe.

Posted by inboulder | Report as abusive
 

To everybody saying “oil”: can you explain the link between oil and small business formation? If oil wealth is the critical factor, why aren’t Saudi Arabia and Qatar at the head of the list of entrepreneurial countries? If money is the motivating factor, then why are Norwegians so motivated? The figures quoted by rfreeborn show they’re already swimming in money, without having to lift a finger, according to Oil Theory. Shouldn’t Norwegians have decamped to their vacation homes in Spain?

Posted by Greycap | Report as abusive
 

Top income tax rate in Norway is 47.5%. Top income tax rate in NYC (Federal + NYS + NYC net of allowances) is 45.5%. If we could somehow get the NYC tax rate above 47.5% (I’m looking at you, Sheldon Silver) people in NYC would stop worrying about hitting the hedge fund lottery and buckle down to making $100k a year while taking startup risk.

Posted by johnhhaskell | Report as abusive
 

I believe that the argument about oil is that it provides some portion of the funding for the strong safety net, which in turn gives entrepreneurs more peace of mind to go about creating small businesses.

Sans oil, I imagine either Norwegian taxes would be higher (possibly stifling small business) or their safety net would become more porous, which would also stifle small business.

You can see this in the US as well (I believe) with Alaska and Texas being able to rely less on taxes from residents due to the oil reserves in their respective states.

Posted by djiddish98 | Report as abusive
 

Also Re: Saudi Arabia and Qatar – I would hazard a guess that the wealth from oil is captured from the ruling class and not distributed back to the rest of the citizens via a safety net.

Posted by djiddish98 | Report as abusive
 

@GreyCap – excellent point, but you’re also emphasizing how far off Felix’s take on the underlying reasons of Norway’s entreprenurial environment really is. He seems to be trying to make the point that a generous social safety net is THE key factor, and tax policy doesn’t matter. However, you note logical counterexamples.

Felix knows better than to use anecdotal evidence or a single data point to make the broad claims he is attempting to make. I suspect that his personal biases are once again causing him to look at a small part of the world with rose-colored glasses.

Posted by Curmudgeon | Report as abusive
 

It’s silliness to argue that the fact that Norway is rich in natural resources explains the success of its economic model. I haven’t noticed anyone making that argument about Nigeria. Mexico, Brazil, Iran, Iraq… None of these have this poverty level – 3.5%!! Saudi Arabia has serious unemployment among youth.

Come on, folks. Credit where credit is due. Natural resources are usually a curse due to many factors, including its role in increasing inequality.

Posted by nyet | Report as abusive
 

Dalmo may run a $44M company, but that provides no indication of how much he earns individually. If it was a publicly traded US company, there is a good chance his compensation would be at least a few million dollars per year, because most CEOs and their defenders think that’s what you have to pay to get a successful CEO – several percent of sales. But I would be surprised if he makes more than $500K, in which case his taxes are not that different than the US.

I would also guess he doesn’t hoard his company’s profits, nor pay his lowest paid employees 0.2% of what he is paid. When income is more evenly distributed, the need for higher tax rates (and revenues, as less government services are needed to keep low income earners alive) disappears.

And Norway probably spends a lot less on military adventures and contractors, and also probably doesn’t subsidize the banking industry the way the US does.

Posted by OnTheTimes | Report as abusive
 

If people actually read the article, they would notice that the author of it mentions that the safety net is funded “largely from taxes” while the proceeds of the oil extraction are “mostly” invested through a sovereign wealth fund. “Largely” and “mostly” are important caveats, but I think the point still stands: it’s certainly not all about oil wealth.

And it’s true that U.S. could never afford a similarly generous safety net even with taxes as high as Norways, mainly due to our “pre-existing condition” of high medical costs and outsized military expenditures. But that is hardly a knock on Norway, is it?

Finally, I think the central point of the article wasn’t necessarily to say “we should emulate Norway” but to say that our fear of taxes has become completely paralyzing, and that the very typical justification for that fear- that it will hurt enterpreneurs – is completely bogus. There is nothing about oil wealth, small and homogenous population or peaceful foreign policy that makes that any less true.

Posted by Y.Alekseyev | Report as abusive
 

You people are in denial. Felix is exactly right. Here on the West Coast of the US, startup ideas wither on the vine because no one with children (and without a trust fund from Daddy) can start up a company.

You can’t recruit real talent, especially experienced talent in the peak years, 30-45. They have to stay at their big company jobs or risk having no health care for their children, or no college for their children.

You wonder why so many startups are done by youngsters? After all, being young and inexperienced doesn’t actually increase your odds of success. No, it’s because no one is going to leave the Cisco and Google benefits package.

We should emulate Norway. We should have national health insurance and we should have heavily subsidized university educations open to all. If we believe in entrepreneurship and a true meritocracy, both are necessary. And they will have to be paid with real taxes on the wealthy. A 40% federal marginal rate above $400k AGI would solve so many problems this country faces, and would not harm us in any way.

Posted by Dollared | Report as abusive
 

Dollared, yeah because Norway far exceeds the US in startups…. Why stop at Norway? The USSR had universal health care and a superb university system – one just has to look at the quality of their mathematicians and scientists.

Posted by Danny_Black | Report as abusive
 

“A 40% federal marginal rate above $400k AGI would solve so many problems this country faces, and would not harm us in any way.”

Dollared, that wouldn’t even BEGIN to solve anything. The IRS doesn’t break it at $400k AGI, however those with $500k+ have a composite AGI of $1.8T and presently pay $400B in taxes (a 22% OVERALL rate). You could charge them 40% on their ENTIRE income (not just the marginal portion over $400k) and you wouldn’t raise more than another $400B or so. Barely a drop in the bucket.

If you reach all the way down to $200k AGI, you capture a whole 1/3 of the household AGI of the country. Still not nearly enough to close a budget gap the size we’re looking at, let alone provide universal health care.

Want nationalized health care? We would need to raise taxes by 10% or more across the board, for anybody making $30k or more. That is roughly what it would take — a massive tax increase on 80% or 90% (depending on whether you use $50k or $30k as the cutoff) of the household income in the country.

Might be worth it, but don’t pretend there is an easy or painless way to raise trillions of dollars.

Posted by TFF | Report as abusive
 

http://www.chcf.org/~/media/Files/PDF/Q/ PDF%20QuickReferenceGuide10.pdf

Health care spending in 2010 ran $2.3T, of which 53% came from the private sector. You might be able to save a little by reducing benefits and using a single-payer system to keep a lid on costs, but you are still looking at a ~$1T cost annually for full nationalization. That represents 11% to 12% of total household AGI.

Posted by TFF | Report as abusive
 

Danny_Black, don’t waste our time. Should we really have a rational conversation after you’ve said that Norway is equivalent to the Soviet Union?

Posted by Dollared | Report as abusive
 

TFF, your argument somehow assumes that the national health system would be ADDED to the existing spend. You see, that spend is already occurring, in the form of insurance premiums and copays paid to private entities. Taxing as single collector and payor is simply more efficient – so while taxes to a single public entity would go up, the spend on private insurance would disappear. The total spend would go down immediately through the efficiency gains. And the single payor has dramatically more leverage to cut costs, so over time we could drop back to a more rational 8-10% of GDP.

As for your arguments about the limitations of tax revenue at 40% marginal rate at $400k AGI, that assumes we would continue massive, inefficient tax loopholes like capital gains. Just follow Reagan and get rid of that Wall Street subsidy, and the revenues go up dramatically – without affecting normal, working Americans.

The net result across the entire nation is probably a 10% reduction in to

Posted by Dollared | Report as abusive
 

Dollared, was taking the reductio ad absurdum of your “argument”. If not having to worry about health care and a superb education system were the reasons that Norway has – apparently – such a high start-up rate then the USSR should have been better.

Let me give a better example – Singapore. No public health service, miniscule tax and doesn’t happen to also be sitting on some of the largest mineral reserves in the region. Another example? Hong Kong or Taiwan.

As for no people leaving Google or Cisco for startups, I can only assume you have never been within a billion miles of Silicon Valley. Here is a little hint, look at the COO of Facebook and where she came from.

Posted by Danny_Black | Report as abusive
 

Dollared, you have of course seen how “efficient” the UK’s NHS is right?

Posted by Danny_Black | Report as abusive
 
 

“Taxing as single collector and payor is simply more efficient – so while taxes to a single public entity would go up, the spend on private insurance would disappear.”

Agreed, Dollared, though I’m not wholly convinced that a US implementation would be as efficient as you suggest. Still, you would have to come up with tax revenues to replace that private spend — and for that we’re talking roughly $1T.

“As for your arguments about the limitations of tax revenue at 40% marginal rate at $400k AGI, that assumes we would continue massive, inefficient tax loopholes like capital gains.”

No, it doesn’t. You could tax 40% of *all* income *including* capital gains for households in this range and still raise less than half a trillion. I don’t know precisely what your proposal would raise, but it isn’t anything close to enough.

Posted by TFF | Report as abusive
 

Danny, let me clue you in: Facebook is not a startup. A startup needs the highest talent in its first two years, not after the first $500M from a global investment bank has been landed.

As for your Soviet Union example, all I can say is you continue to be a witless moron. Can you link to me a copy of the Soviet Union’s Limited Liability Company law? A picture of the Moscow Stock Exchange? Danny, it didn’t have private capital. You may find that shocking. Try Wikipedia some time – not only is it a bit of an adventure, it actually has information that isn’t available from the lunch hour broadcast on CNBC.

Posted by Dollared | Report as abusive
 

I can’t quit you, Danny. Facebook’s COO came from Google? Do you think she is worried about paying for health care or her kids’ college tuition? That information WAS available from Maria Baritomo, and you still couldn’t put it together.

Posted by Dollared | Report as abusive
 

TFF, $500B covers far more than what you need for health care transition after you add in the patient premiums. In a very short period of time the efficiency and cost control gains far outstrip any costs, so all of the $500B can be used to reduce the deficit. The rest of balancing the budget comes from rescinding the rest of the Bush cuts and cutting defense back to 2003 levels.

Done. Really. And with massive increases in education spending included.

That’s why Obama is such a putz. The answers are easy, and he won’t even hint at considering them.

Posted by Dollared | Report as abusive
 

“Done. Really. And with massive increases in education spending included.”

I’m still skeptical that $300B-$400B of additional government expenditures can within a few years replace private-insurance expenditures of $800B.

Moreover, a 40% tax rate would be a 60% increase on the present dividend and capital gains rate. A shift in policy that large would likely result in tax-gaming to reduce reported AGI (thus reducing the new tax revenues generated).

I’m not saying this is a bad idea, but I don’t think you can make it work by putting it entirely on the shoulders of the wealthy. Since most people with above-median incomes already have health insurance, why not distribute the cost more widely? They (or their employers) would pay less for insurance, instead paying a little more in taxes. If it can truly be done for $500B, then you could get away with as little as a 5%-7% tax hike. Increase Medicare from 3% to 10%, for example, and apply it to all income (wage and otherwise).

Obama has been ineffectual, but I still don’t think the problems are as easy as you describe. Especially knotted as they are with political battles where people care more about winning than about doing the right thing.

Posted by TFF | Report as abusive
 

http://www.businessweek.com/managing/con tent/aug2010/ca2010084_319342.html

Norway gets 40% of GDP from petroleum, and the link above will show that, yes, this does do a lot to help with keeping unemployment low. When one says the oil revenues go “largely” to a sovereign wealth fund, what, exactly, does one envisage as the purpose of said SWF?

Norway is a very well run country, and a great place to live. I think a more legitimate lesson to be drawn from Norway’s success is: Chavez y amigos have no excuse.

Posted by CavelCap | Report as abusive
 

Dollared, I don’t disagree with many of your points, but if you think the health care program that was passed, or any economic initiative that Obama agrees to are Obama’s answers, then you haven’t heard of the two self-serving, logically and ethically challenged political parties that run Washington, DC. I don’t think the answers are easy, but there is zero chance he could sell any of your ideas, however right they might be, to 218 representatives and 60 senators (60 is the new 51 in the senate).

Posted by KenG_CA | Report as abusive
 
 

TFF and KenG,

We pretty much agree. It’s just that we’ll never, ever,e-v-e-r fix our problems if no one ever, well, suggests it.

My theory is that, as a nation, the US could tolerate insane amounts of defense spending, overspending on health care and farm subsidies, and self-sacrificing trade policies for the past three decades, because we had accumulated huge wealth and competitive advantages.

But time’s up. I think places like Canada and the Netherlands, for example, have such logical systems because they could never afford to avoid conflict by spending extra to please everyone. So they had to fix things. Now, we are against that wall, and the Republidems are still solving problems by using “and” rather than “or.” God help us.

Posted by Dollared | Report as abusive
 

CavelCap, Chavez has one excuse: the self-interested elites he overthrew mismanaged his country since 1540. It’s not like they left him a $500B sovereign wealth fund. They took the money and spent it on condos in Miami.

Give them a generation. That’s how long it took Castro to pass the US in literacy, longevity and infant mortality. Chavez has a much, much larger population, but more money.

Posted by Dollared | Report as abusive
 

The size of Norway’s oil industry does make comparisons to other (non-oil producing) countries difficult. Even if the vast majority of oil revenues goes into the trust fund, having a large oil-sector guarantees full employment for the country.

But Felix’s point is that reduced inequality and an increased social safety net makes for an increased entrepreneurial spirit (and possibly a happier society). Why not examine other neighboring countries to Norway, for instance, Sweden, Denmark, Belgium and Finland. These last four countries are prosperous, have high taxes and reduced inequality. It would be informative to examine the entrepreneurial spirit in these four nations.

Posted by Kosta0101 | Report as abusive
 

Dollared – I have done Silicon Valley start ups and I couldn’t agree more. You are absolutely correct. In this country we worship individualism in a way that is so emotional and stupid, it ends up undercutting entrepreneurship. We’re not allowed to have the benefit of a social welfare state, so we end up being chained to corporate jobs. How ‘individualist’ is that.

Going out on your own is high risk. A former boss of mine, who had the highest score in the country on the computer science GRE the year he took it, was one of the first 20 hires at a major tech company. He went out on his own, lost his money on a startup, got cancer (in his 30′s), had no insurance, went a million dollars in debt, then committed suicide. He could not face going bankrupt. In Norway he’d probably be a serial startup founder. Not dead. What a stupid system.

Posted by nyet | Report as abusive
 

Dollared, no they left Chavez a country with huge natural resources at a time when the value of those natural resources are at record highs. I am a bit surprised you got so offended at the comparison with the USSR given you seem to think Cuba is a model to be emulated.

The COO joined Facebook in 2008 some 4 or 5 years after it started – which once upon a time would have been considered a startup, especially given it’s relatively low income in those days. I only picked her because of your claim no one would ever leave their safe jobs at Google or Cisco for these riskier jobs. Oh and what “global investment bank” invested 500m prior to her joining?

As for 500bn USD, the UK spends over 3,000USD per person on the NHS which would come to around double what you are claiming the US can do it for.

Posted by Danny_Black | Report as abusive
 

nyet, maybe i am reading Dollared wrong but it struck me what he was originally claiming was that your ex-boss should have been so terrified at the possibility he might get sick with no insurance or might not be able to pay for his kid’s college that he would cling to his “safe job” like a baby to safety blanket. Something that was clearly not true in his case, nor i suspect in most genuine entrepreneurs. Most the genuine entrepreneurs i met were not scared of failing but rather more scared of either not making the leap soon enough.

Posted by Danny_Black | Report as abusive
 

Danny_Black, you wouldn’t know an entrepreneur if he left you $10M via his Nigerian Registered Agent.

Here’s the thing: entrepreneurs may be all hot to trot, but they need senior engineering, marketing and sales leadership to create successful businesses. Without a social safety net, entrepreneurs can’t hire employees 3-10. If you get past that hump, then you get VC funding, a health care plan, and you can hire senior people. But how do you get the VC funding if you don’t have the key leadership positions filled?

Posted by Dollared | Report as abusive
 

In my personal experience, the #1 obstacle to people creating a small business has been the need for health insurance. One spouse has to have a full time job to permit the other spouse to start a business. Even when that happens, the inability of a small business to provide health insurance (because the risk pool is too small) makes it very difficult to keep employees. Even when there is health insurance, the *expense* of that insurance puts a small business at a severe disadvantage when competing with larger companies for employees.

Posted by bruce1963 | Report as abusive
 

Instead of looking for an exact fit, take the good parts and apply them to our situation as best we can. Then reassess after a certain period of time and see what works and what doesn’t. It’s simple really – but not easy. But you have to have people who are williing to do things differently instead of holding onto the past. For all of the innovation the U.S. is known for, it’s still stuck in thinking that anything that smells like socialism is the work of the devil. There are a lot of things being done by lots of different countries that will help the U.S. Wake up and smell the roses. :-)

Posted by rigpa44 | Report as abusive
 

ahhh hahaha…
HAHAHAHAHA

[…an industrial mechanic with a high-school education who chafed under his bosses, set up his own shop, and is now running a $44 million company with 150 employees. That’s the kind of story which should be common in the US but is in fact rare.] BHO: what? you can’t be serious, this happens all the time in the US [But ask yourself: in the US, how much would such a person be paying in taxes? Dalmo paid $102,970 in PERSONAL taxes on his income and wealth last year, which is probably lower, not higher, than the CEO of a $44 million company would pay in taxes in the US]

Ok, how much did he PERSONALLY make? If I have to make up numbers to get answers to obvious questions it’s not a well written article unless concealment is part of the game – Felix aren’t incomes public record? Point being is that people pay themselves in the most tax efficient manner.

He most likely is paying himself a low income knowing that his corporation is worth millions not unlike Warren “lets raise taxes” Buffett bc Norway’s wealth tax has a laughable 1.1% max rate.

Norway is also a very expensive place to live. Oslo, the nation’s capital, has consistently placed in the top five most expensive cities. I paid over $10 on the streets of Oslo for a burger in 2005. http://finance.yahoo.com/family-home/art icle/109909/
the-worlds-most-expensive-cities-2010

Most likely the results of a VAT. And as mentioned by previous posts, petro is a huge part of the economy… from wiki: “Norway is the world’s fifth largest oil exporter, and the petroleum industry accounts for around a quarter of its Gross domestic product”
en.wikipedia.org/wiki/Norway hmmm….

“You can’t just treat them like machines,” he says. “If you do, they’ll be gone.”

How is that any different than the US or any non-communist nation?

To those who mention “Nigeria, Mexico, Brazil, Iraq, Iran” who profit from oil I think its pretty clear none of these nations (besides Brazil – who’s economy is booming) are well run. Ps Brazil receives only 12% GDP from oil ~ The Economist. A stable region and government are contributing factors to Norway’s oil driven success.

Also consider the size (expense) of the US military compared to whatever Norway has. I acknowledge this is a tangent, but someone someday will have to stop the next global terror (China, Russia, whoever) from whatever atrocities they choose to commit. Norway and all of Scandinavia (and even some socialist European countries) have opted out of that equation.

We are effectively debating the success of socialism here are we not? How many socialist societies are functioning well today or have survived for that matter?

Posted by BHOlied | Report as abusive
 

“the UK spends over 3,000USD per person on the NHS.”

Between the insurance premiums deducted from my paycheck and my companies contribution, my family of 4 spends $12,000 for a policy with a $5000 deductable… so even to a republican distrustful of all things goverment… that $3,000/person dosen’t look all that bad.

By far the hardest part of the whole healthcare debate is getting everyone to be honest with themselves about rationing. It already happens to some extent now. Medicare generally won’t pay for an organ transplant for anyone over 70… it’s just not a defensable expendature of the money or the organ.

You can argue that’s it’s unfair that Steve Jobs gets to be in the 4% of people that survive with Pancreatic Cancer for more than 5 years while your average Joe get’s told to spend the next 3 months with his family…

but hey… Jobs did change the world and lead 2 fortune 500 companies to tremendous success, paid tens of millions in taxes, and so he can afford the best of everything including healthcare. That might sicken some but it seems imminently fair to me… (and my uncle died of P/C)

Posted by y2kurtus | Report as abusive
 

Change, wow that’s heavy man. I don’t like my miserable life but having to change my beliefs to get something better is just to high a price to pay. If I look closely I can see that the gold could be shinier and the diamonds could have more sparkle. I mean they look cool and my kid does need that operation but I can think of so many reasons why it would not work for me. I might wait until somebody offers me a better deal, one that means I don’t have to change at all and I can just keep doing the same stuff that isn’t working but suddenly it does work. Wow pass the bong.

Posted by Sinbad1 | Report as abusive
 

Reuters commentators are as much in touch with reality as a proverbial bubble boy. Knowing how to use a word processor and spell checker IS NOT enough to write articles on global issues.
To prove to you that author of this article is a total moron just take Norway’s GDP ($388 Bn) and than subtract proceeds from oil exports ($83bl) and metal exports ($9.7bl) than divide that number bu Norway’s population of 4.5ml and the GDP per head will go down by $18.5K. All numbers from 2010 Economist Pocket World Guide. And if you go back to 2005 when oil prices were at $35 bbl level per head GDP was only $34K.

Reading this article was the worst waste of my time today.

Posted by 74LS08 | Report as abusive
 

y2kurtus, unless I am misunderstanding something 12,000/4 = 3,000USD and you have never experienced the lottery that is the NHS. I think some of the best service and certainly the worst service I ever got was from the NHS.

Also 3,000 is the headline figure without all the accounting fiddling the Labour Gov was famous for.

Dollared, yet weirdly start-ups hire their first ten employees all the time in the US and in far east countries with no social safety net at all. Or are you stating that all US companies magically formed as if from Zeus head?

Posted by Danny_Black | Report as abusive
 

I am Norwegian and there are some facts that people simply misunderstand. Norway is not a wealthy country only because of petroleum, in fact, every year only about 4% of the income from oil and gas are used in the state budget and are not that big a part of the budget in total. The rest of the yearly savings from oil/gas are directed into a state fund, that invest globally (ownership of 1% of world stocks/ 500 billion dollars!) but are obliged to invest ethically for future generations, long term that means. The thing is rather that the fund is merely being used because it is to big and may cause inflation if it is used in a great manner. The reason for Norway being wealthy is more the effectiveness. For example social programmes for the poor and troubled, are not just social but also a way to increase domestic spending. Just as the small variations in income, the almost non existing differences between rich/average (poor people are usually poor only because of alcohol/drugs) the fact that everyone have the resources they need is better for the economy than a situation where some are struggling and other are obsessed about bling-bling things, that are also bad for morality. The high number of days of vacation and the easily restricted amount of allowed working hours is an incentive for creative development outside work, it creates a good public attitude to work so people work longer and it makes room for everyone on the jobmarket keeping the unemployment low. The taxes and living costs are just in in proportional with the average income and relatively seen just average.

Posted by Saadjad | Report as abusive
 

Thank God, someone has pointed out the banality of the “it’s only their oil!” canard.

Apart from the fact that Norway only spends a fraction of its oil income on the present budget – as Saadjad correctly highlighted above, AND the actual article if we’re being picky – the country had already achieved a high standard of living together with social support structures before the discovery of its oil in 1969.

As a foreigner that has lived in Norway for close on two years, I have to say that the conception (in other OECD countries especially) of what constitutes “Scandinavian Socialism” is often so misguided as to be all but useless. I don’t agree with everything that I have experienced here, and would be cautious for suggesting how replicable their system is. However, I will say that their mixed-economy structure works for them, if nothing else, for the simple reason that everyone buys into it.

The Inc. article describes an example that was particularly striking to me as well… You can freely view the full salary and tax contributions of any and every Norwegian citizen (your neighbor, priest, date for next Friday night… even members of the Royal family) on public websites*. You can only imagine the cries of “privacy invasion!” if you tried to implement that kind of system in other parts of the world and yet it appears perfectly consistent with the Norwegian view of how a transparent and fair society should be run.

* E.g. http://skattelister.no/

Posted by stickman | Report as abusive
 

Here’s how to become Norway:

1) See to it, that most of the people read at least one daily newspaper, giving the electorate a good knowledge of political and social issues, business and a global outlook.
2) Make the journalists compete to reveal crime and corruption in business and politics.
3) See to it, that the voters elect honest, hardworking politicians, taking wise decisions for local and central government.
4) Make the government sector transparent, so, though honest, nobody is tempted to be dishonest or behave corruptly.
5) Create good relations to all your neighbor countries, even Swedes and Russians.
6) Take good care of all your citizens.
7) See to it, that almost everybody has a job.
8) Continue like that for at least 100 years.

Posted by otbergo | Report as abusive
 

Great article! I’ve been wondering about the fact that in the USA the top environments for startups seem to be mostly in some of the highest taxed places…Silicon Valley, New York, Boston, etc. I’m not sure about taxes in Boulder and Austen relative to average communities but I know the top three are much higher. And yet young entrepreneurs continue to migrate there.

Posted by MikeInAtlanta | Report as abusive
 

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