Jeff Berger —
Last January Donald Trump tweeted that immigrants to America should not be allowed to come from “shithole countries” like Haiti and nations in Africa. Instead, he said, he preferred people from countries like Norway. People on Twitter, including some who are actually from Norway, were quick to remark that, for many Norwegians, America may seem to be the shithole. Of course, Donald Trump doesn’t know the first thing about Norway. He probably doesn’t even know its reputation for being a socialist country or the fact that it is part of NATO. To help me better understand Norway myself, I read George Lakey’s Viking Economics: How the Scandinavians Got It Right-and How We Can, Too (2016).
Lakey is a Pennsylvania Quaker who studied in Oslo in 1960, where he married a Norwegian. Lakey taught for a time in both Norway and London. He is known for being an activist, especially as a pacifist dating back to the civil rights protests and anti-Vietnam War movement. Viking Economics is about Norway, Sweden, Denmark and Iceland—especially about his wife’s native country. (Finland is Nordic, but not Viking.) Norway ranks as the happiest nation on the planet. I wanted to know the reasons for their happiness and success. Is it because of the North Sea oil? Is it because the population is homogeneous? Is it because the population is sparse? Is it because of socialism? The answer is all of the above. However, there is probably more to the reasons than just these four.
North Sea Oil
Norway discovered oil in the North Sea in 1969. That Norway should be so wealthy is no surprise. It is the world’s 5th largest oil exporter, with annual oil revenues of around $40 billion. Norwegians wanted to ensure that the money wasn’t squandered on building large estates, yachts, expensive jewelry and cosmetic surgery. Norway boasts a vibrant and diversified economy that spreads prosperity widely within the society. Norway is among the countries with least differences of income between its richest and poorest citizens. But the discovery of oil did not guarantee success for Norway. Many other countries have discovered that oil can wreak havoc on their economies by creating a wealthy energy-export sector while disrupting or even bankrupting other export sectors.
During the 1970s the Norwegian government realized that the rising value of its currency was hurting its non-oil export industries. After two decades of trying to create a balanced economy, by 1995 the flood of income had grown beyond what the economy could absorb. So, Norway created a special buffer fund to keep the oil profits out of the economy by declaring them the property of future generations of Norwegians. The government forbid itself from using more than 4% of the money for current infrastructure and other public projects and invested the rest in financial markets abroad, effectively sending it into exile.
This ethic of saving money seems to have been lost on Americans, both at the public and private level. During the last four decades, the only president to achieve a balanced budget was President Clinton. In the latest tax plan, the Republicans knowingly committed the government to borrow an additional $1.5 trillion to reduce the taxes for corporations, on the mere hope that the tax savings will pay for itself. At the same time, Americans are happy to get a few more dollars in their paycheck, but the likelihood for most of them ever being able to retire is slim. Saving is simply not part of the American culture anymore. It is for Norwegians.
Something changed in America and many other western countries in the late 1970s as the baby boomer generation became the dominant voters. The baby boomers started changing the rules of the game. Whether they did it on purpose or not, the baby boomers prospered while mortgaging the future of their countries. Today many retired baby boomers are home owners without any debt and they have pension from the corporations for whom they once worked. Today’s younger generation of workers can only dream of such a retirement. Whose fault is that? Their parents. But not so in Norway.
Building an Infrastructure
During and after the Presidency of Franklin Delano Roosevelt, when federal taxes were very high, the United States built an infrastructure that was second to none. After discovering oil, Norway’s first order of business was to build up their infrastructure in the same way that the US had done. They built lots of tunnels through its mountainous terrain to serve its sparse population. With harsh winters it is expensive to maintain their infrastructure, but they do it.
Donald Trump wants to improve the infrastructure of America. The only disagreement is how to pay for it. Trump doesn’t want the federal government to pay for it. He wants local and state governments to pay for it, using money that they don’t have. He also wants Mexico to pay for “the wall.” He should ask Tinkerbell to pay for everything.
Building A Healthy Society
Norway’s economic goals are egalitarian, but they were never anti-capitalist. The government provides free health care and education. The government provides generous worker benefits in terms of unemployment compensation, social security, generous pay for maternity/paternity leave and child care. Their incarceration rate is only 75 per 100,000, compared to the US rate that is nine times higher and is the highest in the world. The recidivism rate in Norway is only 20%; in the US 67% of released prisoners are re-arrested and 52% are re-incarcerated. Norway also spends much less on healthcare than the US; only 9.4% of its GDP compared to 17.1% in the US.
Norway is also one of the healthiest countries on the planet. Norway’s infant mortality rate is 2.5 per 1000 births. The US infant mortality rate is 6.1 per 1000 births. The average Norwegian life span is 82.1 years, topped by Sweden at 82.55 years and Japan at 83.84 years. The average American lifespan is only 78.74 years.
The Viking Spirit
Labor unions are strong, but a cooperative spirit prevails in Norway that goes beyond the government and labor unions. Employers feel that a happy worker is a good worker. And yet, capitalism does thrive. Entrepreneurs continue to invest. When many Americans think of socialism, they think of Cuba or Venezuela. Norway is nothing like those other socialist countries.
A lot of the so-called socialism is through cooperatives such as housing cooperatives and grocery cooperatives—concepts which have been applied in such diverse places as the city of Berkeley and Israeli kibbutzim. Consumer cooperatives provide leverage for consumers against producers, but producers continue to produce. Housing cooperatives eliminate greedy landlords. In the US, housing cooperatives exist in the form of condominiums which are managed by home owner associations (HOAs). HOAs can be very contentious, but when there is a cooperative spirit, they are very successful. Lakey believes that this cooperative Viking spirit has been handed down for centuries.
Banking and Finance
When the Europeans began to form the European Union, Norway recognized the potential dangers of surrendering its sovereignty. The problems that motivated English voters to vote for Brexit in 2016 help to illustrate the dangers. Managing the economy of the nation is much more difficult when different states within a union have different economic philosophies and goals. Unlike Great Britain, Norway refused to join the European Union from the get-go.
Furthermore, unlike their Icelandic brethren, the Norwegians refused to get caught up in the financial frenzy that was wrought by financial deregulation in the late 1990s and the 2000s. In 2007 Iceland was thought to be one of the most successful countries in the world. In 2008 Iceland was thought to be one of the world’s great failures. And who came to their rescue? Norway. However, much to Iceland’s credit, the government resisted pressure from the International Monetary Fund to honor the debts created by its private bankers and they refused to impose austerity on the population. On the contrary, the government increased social benefits and 29 bankers went to jail. As a consequence of Norwegian assistance and Icelandic fortitude, Iceland’s economy rebounded much more rapidly than any other country, including the US.
Even if the high population density of California and New York weren’t enough to label these two states as shitholes, the lack of full sovereignty is enough to label them as such. Norway has its own currency. California and New York share the same currency as the rest of the US and they both subsidize the poorer states through federal taxes. The Federal Reserve controls the money supply in the US. The Federal Reserve must cater to the entire country, not just California and New York. This lack of sovereignty hurts the Democratic states economically.
Does homogeneity play a part in Norway’s success? Probably. Only 14% of its 5.3 million people are foreign born and some of them are Muslim. It’s not a lot of people. The entire population of Norway matches the population of the San Francisco Bay Area. Population density is a much greater factor than population homogeneity, But, experience shows that poverty contributes to terrorism. There is much greater opportunity for Norwegian Muslim immigrants to succeed because it is an egalitarian society. Furthermore, socialism is an Islamic concept. Islam preaches that a sense of community is more important than individualism. However, Muslims are required to obey Norwegian law irrespective of what the Koran says. So far, so good. The only terrorist incident in Norway to date was right wing terrorism.
Norway is a founding member of NATO. Its defense budget in 2014 was $7.2 billion, which is $1348 per capita. The US spent $597 billion, which is $1860 per capita. Norway shares a 121 mile border with Russia and it forms a strategic part of NATO’s air defense against Russia. But, Norway played only a minor role in the first Gulf War and in Afghanistan. It refrained completely from George W. Bush’s foolish war in Iraq. Thus, Norway has not squandered its resources on war. Republicans would argue that Norway is not spending its fair share to make the world safe for democracy. It could be a fair point to say that during the Cold War, the US protected Norway from the Soviet Union. However, arguably the world is less safe than it should be because of the United States. It was, after all, Ronald Reagan’s CIA who trained and funded Islamic fundamentalists in order to defeat the Soviet Union. Osama Bin Laden was the CIA’s Frankenstein.
Norway is investing in renewable energy as fast as they can, because they know that global warming is real and they know that their oil won’t last forever. Norway is a heavy producer of renewable energy because of hydropower, with over 99% of the electricity production coming from hydropower plants. Norway has limited resources in solar energy, but is one of the world’s largest producers of solar grade silicon and silicon solar cells. In order to reduce its dependencies on hydropower, Norway has plans to shift more to wind power, both through domestic consumption and through trade with Denmark, Germany and Scotland.
Before concluding, I want to share a couple of the negative conservative reviews of Lakey’s book on Amazon. One reviewer wrote: “This book is fundamentally a propaganda tract arguing that the philosophy of nonviolence works. To make this argument it falsely portrays gains of working class people as having been won by relying the on the philosophy of nonviolence. It’s not the honest attempt to write history that it purports to be.” Another one wrote: “Great reporting on Scandinavia, but in the end advocates revolution in US to achieve same status of socialism which has proven to be disastrous in Venezuela.” I wondered if these reviewers actually read the same book as me.
Conservatives make the argument that Norway’s happiness and success is not sustainable, because their oil won’t last forever. That may be true, but even if it is, the US is still a shithole compared to Norway. In any case, blaming all of Norway’s happiness on its oil fortunes suggests that Americans are not happy because the US doesn’t have enough money. The US doesn’t have enough money? It’s true that the federal government borrows recklessly. However, it is hardly the case that the US doesn’t have enough money. The money is in the hands of the one-percenters. Since the presidency of Ronald Reagan, Americans have been waiting for that money to trickle down. If trickle-down economics works so well, why are Americans so unhappy?
Another conservative argument is that Norwegians are happy because they do not work hard. Indeed, statistics suggest that the standard work week is only 37 to 38 hours, although these measures don’t necessarily reflect non-standard working arrangements such as work-at-home. In any case, Norway’s economy is more productive than that of the US. Norway’s GDP per capita has taken a big hit since 2013 when it peaked at $103,000, dropping to $81,000, but it was still 23% higher than the US. But, the point shouldn’t be that Americans should work as few hours as Norwegians. Perhaps Norwegians don’t need to work as hard because of the oil money and perhaps they will need to work harder when the oil money runs out. And yes, perhaps they won’t be as happy when the oil money runs out. But, the US has plenty of money too and it still isn’t happy.
Everything that Bernie Sanders advocates is the same thing that Norwegians advocate and Bernie almost won the Democratic nomination. To this day some conservatives have more respect for Sanders than they do for Hillary Clinton. Sanders has been labeled a socialist, but he is no more a socialist than was FDR. Many conservatives hate FDR’s New Deal, but many of these same people love Social Security and Medicare. Some older citizens might even be sorry that education is not as cheap as it was when they were students.
As was true when Ronald Reagan was elected President, conservative voters today think that the government is the problem, not the solution. Once again, today they support a government that is willing to mortgage the future in order to help themselves. And they wonder why a Norwegian would think that the United States is a shithole?
Nobody can expect the US to emulate Norway, primarily because the population density of the US is far too great. The average Californian living in Los Angeles or New York City is just as liberal as Norwegians, but a Norwegian might consider Los Angeles and New York City to be shitholes because of the high population density. I would if I was Norwegian.
I visited Norway a few years ago. It may have been the best three days of my life. I visited the two largest cities in Norway: Oslo and Bergen. It was Memorial Day weekend and it was 80 degrees, bright and sunny until 10:30 pm. It was a three-day picnic for the Norwegians. Coming from California I found it to be very expensive. I asked the waiters at the restaurant how they coped with the high cost of living. They all said that they were paid well and they didn’t mind paying high taxes, because they got what they paid for. They could look forward to a comfortable retirement. They felt secure about their future. How many Americans feel secure about their future?
Jeff Berger (Author) – Tech writer, public speaker, and engineer. He earned Masters degrees in statistics and operations research from the University of California, Berkeley, and was employed by IBM for more than 30 years. He developed an interest in history and economics during the 1990’s and now wonders if he might have chosen the wrong career.