“KPMG predicts economic growth of 1.4 per cent next year, but cuts this to 0.6 per cent if Britain leaves the EU without a deal.” — The Times
While some firms predict slower than normal growth for the UK economy in the post-Brexit timeframe, it’s always good to reflect on the assumptions that forecasters employ in creating their reports and why such forecasts can cause more harm than good.
If you tell your employees that, ‘the chips are down, the economy is sinking, and corporate belt-tightening isn’t far off’ they are likely to respond in a negative way. Some may look for other employment, some will opt for early retirement, while others spend more time in the staff room talking with their coworkers about their employment concerns than getting their work done. Which means such reports can actually cause the negative outcome they’re warning about. It’s human nature to perform to a predicted level instead of trying to exceed expectations. There are few exceptions to this behavior and they are called names like; Olympic athlete, Pulitzer Prize Winner, President, or Astronaut who have the innate ability to ‘power through’ the negative times without losing momentum.
Such reports deal with known inputs only. For example, a zero-tariff trade deal with the Americans may seem far off today, but by 2020 it may already be signed. And not only the U.S., other political and trade blocs are likely to sign trade deals with the UK following Brexit. The AU(Africa), MERCOSUR (the South American trade bloc), the Pacific Alliance (several Pacific nations), the CPTPP(the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) nations, ASEAN(the Association of Southeast Asian Nations),The Commonwealth(Commonwealth of Nations), and China, are likely to expand their trade links with the UK after it departs the European Union. America and those seven trading areas will have a combined total of 7.0 billion people by 2020. That’s a lot of potential consumers, and the massive opportunities presented by signing zero-tariff trade deals post-Brexit are absent in most economic projections by design. Even if the UK were to sign only one free trade deal (with the U.S., for example) it could improve UK growth by a full 2 per cent or more. Presto! A shiny new UK economy!
“Now we’ve got them!” While economic forecasting provides vital information for policymakers, Brexit negotiators aren’t helped by the news that growth will slow even in the face of a ‘good Brexit deal’ and will slow moreso in a ‘no Brexit deal’ scenario. It’s the kind of report that makes Michel Barnier’s day! KPMG is certainly one of the most respected firms around, but if you’re a Brexiteer and a report like this has been released to the public instead of it remaining in the hands of policymakers it plays with your mind; “Are they working for the UK’s best interests or are they working for the EU’s best interests?” (and) “Who commissioned (who paid for) this report and what parameters were used?”
So, while the good people of KPMG do their best to provide policymakers with the best near-term assessment of the UK economy, making such reports public can actually cause the negative things to occur about which the report warns.
That’s why policymakers everywhere must be ahead of the curve and treat all such documents as ‘the worst-case scenario’ without exception.
Now that UK Prime Minister Theresa May has been reliably informed that the worst the UK can do is 0.6 per cent growth between now and 2020, it should be an easy matter to arrange a number of free trade deals and blow the doors off that projection by 3 or 4 per cent by 2020.
Looking at this in the proper context means accepting that exiting the European Union is merely a necessary stepping stone to get the UK to 4 per cent growth by 2020 — which should result in Theresa May keeping the PM’s chair for at least one more term and with all past ‘political sins’ forgiven.
The Economics of Empowerment: How We Could Add Unimaginable Wealth to Our Civilization by Adopting New Ways of Thinking
There’s a circle centred around a geographical point in Asia where 51% of the world’s people live. That’s 3.6 billion who live in an area only slightly larger than the United States (once you factor-in the land that humans can actually live on)
‘The Circle’ has perhaps the widest disparity levels in the world; While some of the people living within that circle have fabulous wealth, others live their entire lives at landfill sites sifting through the flotsam and jetsam in a desperate attempt to find items of value to sell on the street.
Of course, there are disparities all over the Earth but nowhere else are there 3.6 billion people living in relative proximity to each other, some of whom may drive a different Lamborghini each day of the week and fly their personal jets at the weekend to the many exotic resorts in that part of the world, while others live in squalid tents with no water supply nor electricity their entire lives.
If ever there was a region of the Earth where investors might find the most highly motivated workers and many natural resources available to create huge returns on investment, this has got to be it!
In the West, where I live, we are beset by ‘First World Problems’ — it’s a family emergency when little Jimmy doesn’t get EXACTLY the tablet computer he desired for Christmas, or when the pizza delivery driver is 20 minutes late with our pizza. Even more serious is getting stuck in a traffic jam when we’re on our way home from work.
Very. Serious. Problems.
In The Circle, a ‘serious problem’ is when a venomous cobra has killed five people in your tent-city neighbourhood overnight, or when the water supply that is required to sustain human life is suddenly cut off by the authorities or by farmers who divert much of the water for their own use farther upstream, or when the river disappears due to drought.
In some areas of The Circle, once a criminal gang begins operating in your region, your life begins to change on that very day and whatever they decide to do with you, that will be your fate for the rest of your life…
Like the lions of Africa, life is ‘day-to-day’ for alarmingly large numbers of humans caught inside this sometimes cruel circle. At any given moment, a lion in Africa may get killed by hunters/poachers, by competing lions, by a pack of hyenas, or by a stealthy underwater crocodile at the old watering-hole, or any number of other reasons. Shockingly few lions make it to middle age.
And so it is with people who live within most of The Circle. Life is cheap there. You live ‘day-to-day’. If you can’t find a way to make yourself useful or even better, indispensable to someone wealthy — you’re gone.
As I’ve said, it’s a region with highly motivated people and under-developed resources.
Even investors with the worst track record in history should be able to strike it rich almost anywhere within The Circle
If the 20th-Century was ‘all about The Baby Boomers’ and ‘enabling’ their generation to add huge wealth to the Western nation economies by virtue of their buying power (called ‘Disposable Income’ by economists) — we in the 21st-Century might do as well by empowering the people in The Circle to become all that they can and should be…
We’re looking at nothing less than the greatest opportunity to create wealth in the history of the planet — an order of magnitude larger than the baby boomer wealth-creation paradigm
And in so doing, we’ll lift billions of people out of poverty, creating trillions of dollars of new wealth for corporations and dramatically increasing revenue to government coffers, and provide opportunities for ‘Circler’s’ to earn life-changing disposable income.
Instead of the one success story that we hear endlessly trumpeted on headlines everywhere; Apple Computer now worth $1 Trillion Dollars (by virtue of Apple’s decision to choose low-cost manufacturing in China and sales to EVERYWHERE on Earth) we could have dozens or hundreds of similar success stories (and not only in regards to personal electronics, but in many segments of the economy)
As a civilization we can choose to drop this ball or we can choose to make it work for us
The people who live within The Circle are highly motivated to do their part.
All it will take to add trillions of dollars of wealth to the global economy is the empowerment of an already motivated people via the implementation of a more detailed version of this vision, along with courageous political leadership to see it through to its best destiny — a destiny that works for everyone on the planet.
(Or, we could allow mediocrity to rule the day allowing the region to deteriorate, becoming the largest breeding ground for terrorism that the world has ever seen with enough terrorist numbers to seriously impact life on planet Earth — as compared to the relatively minor bits of terrorism we’ve seen emanating from other impoverished regions, thus far)
The West became incredibly rich by empowering The Baby Boomers in the 1945-2000 timeframe and the ‘Boomers’ responded by creating unprecedented wealth and a better standard of life for billions of people.
It’s high time for us to empower The Circle so that they can add their wealth-creation and better-standard-of-life contribution to our shared civilization.
The best time to do that was 20-years ago. The second-best time is now.
Truism: Whenever and wherever the unemployment rate is low anywhere in the world, drug abuse, crime, and homelessness drops.
Jobs prevent the depression that leads to drug abuse, crime, and eventually, homelessness.
Because corporations in North America prefer a high-ish unemployment rate (to guarantee they get the choicest and hungriest applicants, and to ensure a large pool of seasonal labour, and as a device that works to continuously dampen calls for a higher minimum wage) we have the follow-on problems of depression, leading to drug abuse in some cases, which eventually leads to crime and later, homelessness for many of the working poor.
Which results in higher costs to society and it’s the taxpayers who must cover those costs, one way or another
To solve this utterly predictable set of problems, all levels of government should be working with corporations to ensure that corporate needs are met — but without destroying the lives of many people who would frankly, rather be working!
Nordic countries ask; What societal problems?
Sweden has mandatory job sharing in those industries that can’t employ all of their workers. Except for retired people, students, those with chronic illness, or the very wealthy, everyone in the country works for *at least* 6 months of the year. Which neatly prevents such societal ills.
If you’ve ever visited Sweden, you’ll notice nobody lives in dumpsters there
Some industries in Sweden can’t use all of their available workers, so if you’re a worker in that particular industry it simply means that you’re ‘on work’ for 6 months and you’re ‘off work’ for 6 months of the year.
The ‘alternate person’ steps in and does ‘your job’ for 6 months while you’re on mandatory time off. Both people get Unemployment Insurance (UI) from Day 1 of their respective layoff dates.
It’s not like layoffs in North America. It’s more like, “Your scheduled time ‘off work’ is coming up, Anders. So, have you arranged the dates with your temporary replacement? You have? Thank you.”
In Sweden, you ‘own’ your job, you’re responsible for it, and you want to perform well for the company that has given you the responsibility for making sure that ‘your job’ is done properly
Also, even though you’re ‘off work’ for 6 months, you’re still expected to be available to fill that position whenever the alternate worker is ill, or can’t make it to work for any other reason. You like that a lot, because their UI system doesn’t penalize you for kindly making yourself available to the company AND you get to keep the wages you earned that day.
If you’re ‘on work’ for your 6 months and suddenly want a day ‘off work’ to go buy a house, propose to your partner or whatever, you just arrange it with your job sharing partner — and you’re covered. They come in and do your work for you. You inform the company merely out of courtesy that this will be happening. It’s ‘your job’ after all — not the company’s job.
So, let’s say that you’re off work for 6 months and ‘Sven’ (the person doing your job) has a skiing accident and needs 10 days off work to recover, you not only get your regular UI payment, you also get the normal wages for each day that you replaced Sven.
In this hypothetical job sharing scenario, the job of ‘Anders’ and ‘Sven’ is totally covered no matter what, 365 days of the year
Overtime wages? Unknown in Sweden. With one phone call the company simply adds another already trained worker to the project, and can keep them employed any number of days, or until project completion. Then, they send them back home until the company calls again to help with another project.
Everyone has a job, or is on UI for part of the year. Consequently, depression, drug abuse, crime, and homelessness are almost unknown in Sweden
Everyone has a job. Whether you are ‘off work’ for a time, or ‘on work’ for a time — you have a job, you have a place in society, you belong to a community. You may work 100 days per year, you may work 200 days per year, or any number of days between 100 to 365 days per year in Sweden. It depends how busy your particular industry is in that particular year.
The takeaway point is; If you live in Sweden — you’re a worker, you’re a valued person, you’re part of Sweden’s ongoing success, you belong.
When everyone matters — corporations work better, society works better, and the UN scores your country highly on the UN Happiness Index
Corporations like this employment policy, because more employees than they can afford to keep employed year ’round ‘own’ their particular position and over the course of a year, both workers communicate often, to make certain that every single working day of the year is ‘covered’ for the company.
The company doesn’t care which of the two workers are onsite on any given day, because both are eminently qualified and both feel that they ‘own the job’ and are responsible for it. Which is much better for the corporation when compared to only one person owning that job.
What happens in a Swedish company when an employee has time off due to illness, mandatory maternity leave, vacation times, or car trouble?
Nothing. The alternate worker is likely already on the premises doing the job. Utter, boring, Swedish efficiency! Also known as the Nordic Model — a fascinating mix of social and economic policies which has shown steady, predictable results, going on four decades.
The company knows that every work day of the year, each position in the company will be filled by the regular worker or the alternate worker — no matter what!
The inequality in North America is stunning. And there’s no good excuse for it. It’s merely a lack of leadership. Governments are kowtowing to uninspired, faceless, and unaccountable corporations that only care about the bottom line.
But hey, don’t blame the corporations! They’re in business to make a buck — not to solve social problems — that’s the government’s job.
But when the corporations are the ones causing the social problems via their policy of keeping workers hungry for work through a policy of high unemployment, union-busting, threats to export jobs to Asia, downsizing threats and more — that’s when we need to look at a better model.
And in the case of Sweden and the other Nordic countries, a much better model already exists — not just for society, but one that works better for corporations as well.
Let’s look at Switzerland today, a tiny nation of 8 million people. Historically a neutral country, Switzerland isn’t a member of the EU, nor of NATO, but it is a member of the EU’s common security and defence policy (CSDP) and it became a member of the UN on September 10, 2002.
Some other notable facts about Switzerland are that it is ruled by direct democracy where citizens can block any law or get a new proposal heard and voted on with only 50,000 signatures, and the country has proximity to the largest market in the world, the European Union.
It is also one of the most beautiful places on the planet.
Switzerland makes the best of its opportunities
Switzerland ranks in the top 5 places to live in the world, personal income ranks in the top 5 in the world, it ranks in the top 5 education systems and in the top 5 health care systems in the world. In many other measures Switzerland ranks among the top 10 globally.
How did little Switzerland with only 8 million people, few resources, and buried under a blanket of cold and snow for 6 months of the year, manage all of that and so much more?
As is often the case, the answer is good management!
With less than 2% of the world’s population Switzerland has attained 19th place (nominal GDP) and 36th place (PPP) out of 191 countries
It boasts one of the highest per capita incomes in the world at $137,094 median (PPP)
The country has the highest average wealth per adult in the world, at $540,000 (PPP)
Image by Monsieur Fou (Own work) [CC-BY-SA-3.0] via Wikimedia Commons
What time is it? It’s always Swiss Time.
Historically covered by a thick blanket of snow for six or more months of the year, the Swiss had plenty of time on their hands. So they decided long ago to make some ultra-high quality clocks to mark time until the return of spring.
The Swiss clock and wristwatch industry exported $20 billion dollars worth of timepieces in 2011, making the Swiss #1 exporters of timepieces in the world. Exports of watches and clocks from Switzerland have been ticking upwards, some years showing a 14% increase compared to the previous year.
If you’d like to buy a piece of art that also displays time, you’ll recall these Swiss brand names; Rolex, TAG-Heuer, Hublot, Zenith, Swatch and International.
Switzerland, where the world’s banks do their banking
Owing to long-standing Swiss neutrality and the careful management of Swiss national sovereignty, a stable environment for the banking sector evolved which was observed by many foreign nations and their central banks, hence most of the worlds central banks maintain offices and conduct business there.
The financial sector in Switzerland contributes approximately 12% of Switzerland’s GDP and employs 200,000 people. It is known internationally as the world’s banking capital and all banks cooperate with the Bank of International Settlements, based in Basel, Switzerland. The country’s banks processed a grand total of 5.4 trillion Swiss francs in 2009.
On top of that, foreign banks operating in the country manage almost another 1 trillion Swiss francs worth of assets per year.
Nothing but fresh air in all directions
Switzerland is #1 (2014) and #2 (2013) in the world when it comes to creating a progressively cleaner environment. And not only visionary policy, but tangible results too! As the Swiss work to cut total energy consumption levels in half by 2050, they are using cleaner fuels, more renewable energy, and in 2011 decided to begin the process of decommissioning all of their nuclear and coal power plants, a process which will be completed by 2045. (OECD Swiss environmental link here)
Lucerne and Lucerne Lake, Switzerland. Image by Clare66 (Own work) [CC-BY-SA-3.0] via Wikimedia Commons
Simple, but effective changes have showed promising results. The large amount of household waste set out for curbside collection was tackled via pre-paid stickers that must be placed on each bag to be picked up at the curb. This has dramatically reduced the amount of waste that must be processed.
A large number of complementary projects are underway in the country, which range from sustainable forestry practices (forests cover 31% of the country), to even more world-class transit systems (the spectacular views are complimentary), to the 2,000-Watt Society which aims to lower carbon footprints by cutting total energy consumption levels in half by 2050.
The 2000-watt society (2,000-Watt Society) is an environmental vision, first introduced in 1998 by the Swiss Federal Institute of Technology in Zürich, which pictures the average First World citizen reducing their overall average continuous energy usage to no more than 2,000 watts (48 kilowatt-hours per day) by the year 2050 – without lowering their standard of living.
The concept addresses not only personal or household energy use, but the total for the whole society, divided by the population.
Two thousand watts is approximately the current world average rate of total energy use. This compares to averages of around 6,000 watts in western Europe, 12,000 watts in the United States, 1,500 watts in China, 1,000 watts in India, 500 watts in South Africa and only 300 watts in Bangladesh. Switzerland itself, currently using an average of around 5,000 watts, was last a 2000-watt society in the 1960s.
It is further envisaged that the use of carbon based fuels would be ultimately cut to no more than 500 watts per person within 50 to 100 years.
The vision was developed in response to concerns about climate change, energy security and energy supplies. It’s supported by the Swiss Federal Office of Energy, the Association of Swiss Architects and Engineers, and other bodies. — Wikipedia
Swiss Army Knife stats
The UN DESA list says Swiss citizens have the second-highest life expectancy in the world. Switzerland is also ranked #1 (tied) on the Bribe Payers Index indicating very low levels of business corruption. For the last five years the country has been ranked #1 in economic and tourist competitiveness according to the Global Competitiveness Report and the Travel and Tourism Competitiveness Report respectively, both developed by the World Economic Forum.
Zürich and Geneva have been ranked among the top cities with the highest quality of life in the world. Switzerland has very low tax rates as compared to other western nations. More Swiss citizens have won Nobel Prizes, than any other single country’s citizens.
The Red Cross and Red Crescent, the United Nations (the UN Palace of Nations is the 2nd-largest UN facility in the world), the World Health Organization (WHO), the International Labour Organization (ILO), the International Telecommunication Union (ITU), the United Nations High Commissioner for Refugees (UNHCR) and about 200 other international organisations, including the World Trade Organization and the World Economic Forum in Davos all have their headquarters in Switzerland.
Furthermore, many sport federations and organisations are located throughout the country, such as the International Basketball Federation in Geneva, the Union of European Football Associations (UEFA) in Nyon, the International Federation of Association Football (FIFA) and the International Ice Hockey Federation both in Zürich, the International Cycling Union in Aigle, and the International Olympic Committee in Lausanne.
There is a world-class scientific community that also thrives within the country, some of it centred around the CERN particle accelerator (the largest such device in the world) which is what recently confirmed the presence of the (up-till-then-theoretical) Higgs Bosun. Also, the World Wide Web began as a CERN project called ENQUIRE, initiated by Tim Berners-Lee in 1989.
The largest Swiss companies by revenue are Glencore, Gunvor, Nestlé, Novartis, Hoffmann-La Roche, ABB, Mercuria Energy Group and Adecco.
Also, notable are UBS AG, Zurich Financial Services, Credit Suisse, Barry Callebaut, Swiss Re, Tetra Pak, The Swatch Group and Swiss International Airlines. Switzerland is ranked as having one of the most powerful economies in the world.– Wikipedia
Healthcare in Switzerland
All Swiss citizens are required by law to carry private health insurance and the healthcare insurance companies are required to accept every citizen-applicant. It is an expensive system, but with high wages and even high-minimum-wages in Switzerland it is an affordable system for the Swiss. As noted above, citizens enjoy the 2nd highest life expectancy in the world and even that statistic continues to improve.
The Commonwealth Fund 2013 International Health Policy Survey in Eleven Countries has ranked Switzerland #2 in the world for overall healthcare outcomes.
Swiss President about town
To give you the best idea of how relaxed and civilized Switzerland is, the President of Switzerland, Mr. Didier Burkhalter, takes the train to work just like other citizens and was photographed recently at the train station waiting for the train.
That’s the way it is in Switzerland. The President of the country goes to the train station to catch the train like everyone else. He stands on the platform waiting for the train and texting on his SmartPhone and nobody there thinks a thing about it… yet in North America this is seen as a novel act and it goes viral on Twitter in only 8 minutes.
With only a tiny land mass, no sea access, a small population, minimal natural resources (compared to the U.S.A., Canada, Australia, Brazil or Argentina, for just a few examples) and long winters combined with fragile ecosystems, Switzerland has created a thriving and special society inside a very pure form of democracy — from little else than pure ingenuity. It’s no wonder the Swiss citizens have been awarded more Nobel Prizes than any other nation!
This doesn’t cover half of Switzerland’s achievements and all of this and much more is happening on only 15,940 square miles of land, and most of that is covered with Swiss Alps and glaciers.
Let’s look at Norway, a tiny nation of 5.1 million people. Norway has a medium-sized undersea petroleum reserve, some timber resource and proximity to the largest market in the world. It also once boasted a booming fishing industry, however, with fish stocks in decline only a fraction of that former fishery remains.
On the bright side, Norway has more scenic views per kilometre than anywhere on the planet.
But other than that, the long and narrow, mostly empty country that exists along the North Sea spends most of the year under a blanket of snow, ice, and bitter cold.
Norway makes the best of its opportunities
And yet, Norway has made the most of its opportunities, ranking regularly in the top 5 places to live in the world, personal income ranks in the top 5 in the world, in the top 5 education systems in the world, and in the top 10 health care systems in the world. In many other measures Norway ranks among the top 10 globally.
How did little Norway, with only 5 million people, few resources, and buried under a blanket of cold and snow for 6 months of the year, manage all of that and so much more?
As is so often the case, the answer is found within the question itself. Good management!
Many nations have more generous helpings of natural resources and opportunities available to them compared to tiny Norway, and yet for some strange reason they can’t claim anywhere near Norway’s economic success and resultant quality-of-life for residents.
Norway overcame many obstacles to get where it is today, and chief among them was bad advice!
At Norway’s entry into the petroleum market after discovery of undersea oil and gas reserves in the 1969, the Norwegians were told that oil companies would leave if they weren’t granted exemption from the country’s high taxation, stalling any future development.
The Norwegians were also told that high personal tax rates would cause a flight of capital from the country and that executives and professionals would flee to greener pastures, leaving only a blue collar economy behind which would require Norway to thenceforth hire expensive foreign consultants to conduct the government’s business, high finance and corporate law.
Norway was also warned over-investing in its health care system and education systems could wreck their overall economy.
And the Norwegians were told that their country was too cold, too forbidding, and too isolated to have any kind of serious tourism business.
Well, lets look at how it all turned out, shall we?
With less than 1% of the world’s population, Norway’s economy has reached 22nd (nominal) / 46th (PPP) out of 191 countries, according to the CIA Factbook, with an average of 3.5% (2013) growth throughout the economy
Norwegian public debt is very low at 30.3% of GDP (2012)
Norway’s high productivity score, ranked #15 by the World Economic Forum in 2012 still puzzles economists worldwide
The WEF also scored Norway at #3 globally for its macroeconomic environment in 2012
Norway’s inflation rate is stable at 2.2% (2013)
Unemployment is stable at 3.3% (2013)
Norway maintains an AAA credit rating with the financial rating agencies (2012)
Norway’s entire economy produced $499.8 billion GDP with 3.1% growth in 2012
Out of that $500 billion dollar economy, Norway maintains one of the highest per capita incomes in the world at; 492,000 NOK / $79,104 (2013) (PPP) which places them at (3rd) position in the world
Monthly incomes for all employees, including male and female, full time and part time workers in the country rose 3.9% from 2012 to 2013, averaging 41,000 NOK / $6592, per month (2013)
Norway donates almost 1% of GDP each year to worthy causes around the world, amounting to slightly over $2 billion dollars of foreign aid annually.
Although the incredibly scenic fjords are unavailable for tourism six months of the year, the picturesque cities dotting Norway’s far-flung fjords welcome thousands of cruise ship travelers all summer and are a vital contributor to the country’s economy. Inland, various scenic driving and hiking tours are available and a surprising number of homeowners advertise bed-and-breakfast accommodations.
Skiing and snowboarding facilities exist country-wide and the Norwegian’s have capitalized on all six months of snow and cold temperatures, bringing a combined tourism industry from almost nil, to a multi-billion dollar level with four decades of dedicated effort.
The Lillehammer Winter Olympics officially known as the XVII Olympic Winter Games were held in Lillehammer, Norway in 1994. Norway’s capital city of Oslo held the 1952 Winter Olympics.
Total tourism revenues at the height of the global financial crisis in 2009 were in the neighbourhood of $6.6 billion dollars (direct and indirect) and $319 million dollars (direct) annually.
Norway’s Oil and Gas industry
Norway extracts 1.92 million barrels per day from its North Sea crude oil reserves and also extracts some 200,000 Million square metresᶟ (oil equivalent) of natural gas.
Petroleum profits are taxed at 78%, which nets Norway significant annual revenue. Even with the highest oil and gas taxation on the planet, Norway has no shortage of oil companies willing to exploit the medium sized offshore reserves.
One of the companies involved in Norway’s oil and gas industry is (67% government-owned) Statoil, Norway’s state oil company. It is the 11th largest petroleum company in the world, reporting gross revenues of $723 billion dollars in 2012.
Why does Norway have $700 billion dollars in the bank? And why did it pass legislation to never spend more than 4% of the total in any given year?
While there’s no question that Norway has done well from its oil and gas, unlike many resource-based nations, Norway has invested its petro dollars in such a way as to create and sustain other industries where it is also globally competitive. The second largest export of Norway is supplies for the petroleum industry, points out Ole Anders Lindseth, the director general of the Ministry of Petroleum and Energy in Norway.
“So the oil and gas activities have rendered more than just revenue for the benefit of the future generations, but has also rendered employment, workplaces and highly skilled industries,” Mr. Lindseth says.
Maximizing the resource is also very important. Because the government is highly invested, (oil profits are taxed at 78 per cent, and in 2011 tax revenues were $36-billion), it is as interested as oil companies, which want to maximize their profits, in extracting the maximum amount of hydrocarbons from the reservoirs. This has inspired technological advances such as parallel drilling, Mr. Lindseth says.
“The extraction rate in Norway is around 50 per cent, which is extremely high in the world average.”
In 1990, the precursor of the Government Pension Fund – Global (GPFG), a sovereign wealth fund, was established for surplus oil revenues. Today the GPFG is worth more than $700-billion.
The GPFG wealth fund is largely invested outside Norway by legislation, and the annual maximum withdrawal is 4 per cent. Through these two measures, Norway has avoided hyper-inflation, and has been able to sustain its traditional industries. —The Globe and Mail
Norway fishing and seafood industry
The wild and farmed fishery and non-fish seafood industry in Norway accounts for billions of dollars of economic activity. Exports totaled $7.1 billion dollars in 2009, $3.8 billion of that from aquaculture. In 2011, aquaculture alone had grown to $4.9 billion.
Guided by the Norwegian government, the fishery has grown into a sustainable industry that meets the needs of Norwegian’s and continued growth is expected for fish and other seafood exports.
Summary of ‘the little country that could’
Rather than complain about the cold weather most of the year, Norway took a long look at its assets and location and decided to make the best of it. A telling refrain you will hear in the Nordic countries is, “There is no bad weather, only bad clothing.” That, in a nutshell, is the Nordic mindset.
Indeed, this speaks volumes about who they are as a people. If you want to go out, you dress appropriately. This worldview seems to have assisted the Norwegians to make the most of their opportunities by taking stock of prevailing situations, and responding appropriately.
Norway: Where ‘what matters most’ — actually matters!
Their guiding principles dictate that the well-being of its citizens must be first and foremost in economic decisions, with care being taken to create a sustainable long-term model.
Ergo, a country of 5 million with limited arable land and harsh winter, simply adapted to their environment and their economic environment. Citizens and non-citizen residents are fairly rewarded for their productivity and loyalty to the country, which further engendered productivity and loyalty.
Norway wisely invested in the country’s future so that all Norwegians can receive a full university or vocational education funded by government taxation and receive free healthcare, and many other citizen benefits. Any resident of Norway — whether they’re a Norwegian citizen or not — can apply to Norway’s public universities and receive a full university education free of charge. The idea behind this is that an educated society brings its own economic benefits and increases the dissemination of knowledge to all corners of the Kingdom of Norway.
Likewise, all residents are covered by Norway’s healthcare service, although it can be challenging for the government to provide timely services to tiny population centres of 10-100 people in very remote parts of the country.
Norway proved it can be done
Putting the needs of citizens first, guaranteeing the safety and security of residents, environmentally-sound development of natural resources and sustainable long-term economic models have placed Norway near the top in all global indicators — and that is in spite of the negatives the country must contend with.
Results matter. Ideology does not
Norway is a model that every country must research carefully to contrast and compare with their own results. Which is what really matters. Results matter. Ideology does not matter.
Let’s hear it for pragmatism!
What matters to Norwegians is the well-being of residents and the strength of the economy, and what matters to the Norwegian government are the ratings of respected indices such as those from the UN, the World Health Organization (WHO), the World Economic Forum (WEF), credit rating agencies and others.
Norway should award itself a Nobel Peace Prize for Excellence in Governance and Society.