“Sweden, Norway, Finland and Denmark (collectively the Nordic countries) have a combination of high living standards and low income disparity that has captured the world’s attention. At a time when the growing gap between the rich and poor has become a political hot button in developed nations, the region known as Scandinavia has been cited by many scholars as a role model for economic opportunity and equality.” — Investopedia.
There isn’t a country in the world that shouldn’t be able to match the high living standards set by Norway
Norway provides us with an example that all nations should strive to meet or exceed within a few years’ time
In fact, if we’re doing it right, the stellar Norwegian example will come to be seen as the standard for successful economic policy, instead of the outlier.
But first, let us count the ways that Norway succeeds:
- The highest accumulated revenue surplus in the world, worth $1 Trillion (held in a sovereign pension fund)
- Strong and steady GDP growth (see chart below)
- Very low Debt-to-GDP (see chart below)
- A #1 to #4 ranking on the UN Happiness Index (varies by year)
- A #1 ranking on the Social Progress Index (see chart below)
- Typically a #1 or #2 ranking on the highest per capita income in the world
- In the Top 5 worker productivity rankings in Europe (and by extension, the world)
- One of the lowest crime rates in the world
- One of the ‘least corrupt’ nations. Ranked #5 on the Corruption Perception Index
- An average 2.5% unemployment rate (except during the global financial crisis where it shot up to 5.5%. Not to worry, it’s already fallen to 3.0%)
- Free university tuition for all citizens and residents
- Free universal healthcare ranked 7th in the world (It would rank higher, but maintaining full-service Hospitals in remote regions with tiny populations is uneconomical)
- Virtually 100% of the country is powered by renewable energy except for some remote settlements where a microgrid (natural gas power) is the only choice
- Unparalleled diplomatic credentials. Everyone knows Norwegians are among the best ‘honest brokers’ in the diplomatic world making Norway the ‘go-to’ arbitrators for nations in crisis
- A favorite country of the Olympics committee having hosted successful games twice in recent years
Do you think Norway’s success happened by accident?
Do you think Norway’s success only happened since 1990 when oil and gas began to be extracted off the Norway coast?
Well, you’d be wrong on both counts.
The economy of Norway has grown at a rate better than that of any developed nation stock market, just as it was designed to do. And growth rates were steady prior to the large-scale extraction of petroleum in the country, and remain steady.
Yes, you heard right. The growth rate of the Norwegian economy beats many stock market indices as measured over the decades.
Who wouldn’t want to invest in Norway’s public/private investments, in Norwegian business generally, and in the highly educated workforce with its high productivity rate and so much more?
Successive Norwegian governments have limited deficit spending to a maximum of 4% of GDP during the ‘bad years’ — and used budgetary surpluses to paydown government debt during the ‘good years’
Here’s what that looks like.
Norway’s success didn’t happen by accident, nor did it occur after suddenly striking it rich in the undersea oil and gas fields
Other countries have struck it rich by discovering oil (or other massive resources) and haven’t experienced the positive outcomes seen in Norway. Where are their UN Happiness Index ratings, or productivity stats, or their per capita income stats? Nowhere near Norway’s, that’s for certain.
So why Norway?
Maybe the question should be, “Why only Norway and not every country?” — as every country could and should be seeing the same level of success as Norway.
Some people might question that their particular country, large or small, could excel like Norway.
But low ambition is the enemy of great accomplishments
If you aim low you’ll surely meet your goals. Conversely, if you aim high, you’re likely to excel. The Norwegians aimed high and succeeded — and good for them!
Many years ago, everyone believed that it was impossible for a human to run a 4-minute mile. And with each retelling of that erroneous belief it became that much more true.
After all, if it was that impossible, why bother trying to run a 4-minute mile?
Yet, one man, Roger Bannister from England, decided that he would aim high and run a mile in less than 4 minutes. And not long after making that decision, he did.
Since Sir Roger exceeded that expectation, many thousands of athletes have run the 4-minute mile. It’s almost commonplace nowadays for professional athletes to run a 4-minute mile as part of their overall training programme to prepare for competition.
Norway is the Roger Bannister of nations!
By getting the fundamental economics right, Norway set itself up to succeed every time an opportunity to succeed, appeared. And that in a nutshell, is the measure of successful governance.
Norway with its smallish, mostly ice-covered landmass and its tiny population of only 5.1 million residents has $1 Trillion dollars in the bank!
It’s true. The Norwegian government has carefully invested its revenues and sharply limited government spending to the point that the Norwegian government may not (by law) run a budget deficit of more than 4% in any given year.
By limiting spending in this way, it allowed government revenues to accrue ‘during the good years’ while the economy was booming, and it limited spending during the lean years.
“But Norway is rich because of their offshore oil and gas revenues.”
If oil and gas are the reason Norway is doing so well, then why was Norway wealthy and well-governed prior to the exploitation of their offshore oil and gas?
“Well then, Norway was rich because of its offshore fishing industry.”
But Norway was wealthy and well-governed even before large-scale commercial fishing fleets ruled the seas.
“Norway must be rich from its tourism industry.”
Yet the booming Norwegian tourism industry is only a recent development.
“But Norway must have been rich because of its strong timber industry.”
The same applies. Norway was a wealthy and well-governed country prior to large-scale mechanized forestry.
This conversation could go on for some time… so let me shorten it up for you.
The reason that Norway excels is because Norwegian politicians of all stripes agreed long ago that Norway should ‘live within its means’ and bank surplus government revenues for use in later years
And it has worked wonders for the Norwegian economy, for Norwegian citizens and non-citizen residents, and for global investors.
It isn’t all about the resources! It’s all about the good stewardship!
By strictly applying the Norwegian model of governance every country could see similar levels of success.
Some people might say, “Well fine. But our country has no resources.”
But every country has resources of some kind. There isn’t a country in the world that couldn’t maximize its resources to match or exceed Norway’s stellar example.
And Hey! Citizens are a ‘resource’ too. Just look at Taiwan’s success! And that high level of success occurred despite it being a land of very limited natural resources.
I challenge anyone to make the case that their country couldn’t excel given 10 years of strict application of the Norwegian economic model
You can’t win that argument. Even ice-covered Norway with only 5.1 million citizens, is an easy winner in the competition for the most successful nation as measured by per capita statistics.
They Began with the End Result in Mind
Including the most important statistics of all — a very high ranking on the UN Happiness Index and the Social Progress Index — the stats from which all other positive stats flow. (Say that three times, to let the profundity of that statement to sink in)
Again, it isn’t about the resources it’s about advanced governance
In Norway, it’s about helping businesses to thrive — while putting the well-being of citizens and residents first!
It’s about ensuring a strong, stable, and vibrant society, and it’s about ensuring excellence in economics and governance.
And that, my friends, is the secret of Norway’s success.