Tax Break

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Reindeer in the headlines

What is a Volvo doing in Norway?

What is a Volvo doing in Norway?

Oslo is not the capital of Sweden, and that nice King Harald, who has his photograph taken once a year handing out coveted prizes to clever people, is not the King of Sweden. Harald is King of Norway, which is just as well really as he lives in Oslo which is the capital of Norway (and not Sweden).

If that sounds obvious to you, you may not want to read on – but before you go answer this : “What is the name of the outgoing Prime Minister of Norway who has held the post for the last 8 years?” …GOTCHA! Whoever he is, his name is no longer worth remembering because he was trounced the other day by the incoming Prime Minister (Male or Female?). And, without stopping to think: “Norway is a member of the EU, True or False?”

I am glad you decided to stay. You see, Norway is one of those countries that everybody is vague about, probably because it is stuck up there in the forgotten attic of the world and it is bloody cold.

Mr Stoltenberg preparing recently for his  new career as a taxi driver

Mr Stoltenberg preparing recently for his new career as a taxi driver

What is interesting is that socialist Jens Stoltenberg lost the election despite Norway having the second highest per capita GDP in the world (only beaten by that “Ode To A French National Car Park” – Luxembourg) and unemployment of three point something per cent. It appears that, far from being driven by a desire to move from a welfare state to a more competitive one (Ms Erna Stolberg, the next Prime Minister, is a conservative), Norway’s 5 million citizens were simply bored looking at the same face for 8 years. You might think that they are also bored sitting around sweating in Saunas – but that is in Finland which is not in Norway.

What successive Norwegian governments, and Mr Stoltenberg’s in particular, have done exceedingly well, is solve  the demographic problem Norway shares with most of the western world. In order to finance an increasingly aged population, western countries  need population growth and increased productivity. The world is expected to reach its maximum sustainable population statistic sometime later this century, at which point it will be time to hop on the last VIrgin Galactic flight to Mars.

Norwegian governments, rather than squander all the oil and gas revenues collected from  Statoil, the giant state-controlled company, as well as taxes, licences and royalties from operators, chose to establish a Sovereign Wealth Fund instead. By effectively dampening demand, Norwegian living standards were restricted (Norwegians are, after all, less rich than the Luxembourgians) in the name of a future bonanza.

The Norwegians understood that this guy doesn't do pensions

The Norwegians understood that this guy doesn’t do pensions

Norway does not need a baby boom to ensure its pensioners are looked after – they will benefit from the fruits of their diversified investments around the globe  (by some estimates the SWF owns 1% of traded shares worldwide). Were the western world to do this more systematically  western pensions would be financed by increased productivity in the developing world and, around the time that Virgin Galactic flight is taking to the skies, there would be less frantic worldwide demand accompanied by equilibrium in the world economy. And there would still be plenty of Norwegian Smoked Salmon to go round.

Then, perhaps, King Harald’s descendant would present the Nobel Prize for Economics to Norway – if he could find where it is on the map.

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