Wednesday, December 11, 2013
On Norway and Their Relatively High Per Capita GDP
There are basically five reasons for it; a) massive reserves of off-shore oil, b) access to some of the better fishing waters on the planet, c) a relatively small population (fewer people you have to share the oil booty with), d) the fact that Norway has scored consistently (and, yes, surprisingly) well on a myriad of economic freedom indices (a respectable 31st and ahead of countries such as Belgium, France, Spain, Hungary, Mexico, Poland, Romania, Bulgaria, Portugal, South Africa, Greece, Brazil, Argentina, China, Italy, Turkey, Slovenia, and even South Korea on both the Heritage Foundation and Fraser Institute rankings), and e) the fact that Norway only spends approximately 1.4% of it's total GDP on national defense. This whole leftist assertion that Norway is wealthy mainly because of its welfare state and high level of taxation (except in the corporate area in which their rates are actually lower than ours) is patently absurd, in my opinion.
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Norway seems content and well-off for the reasons enumerated. Whether the 'welfare state' is the cause or the effect might be
debatable. We note:
" You are entitled to four weeks’ plus one day’s holiday in a holiday year. An entitlement to four extra days off has been agreed in a number of industries and wage areas. This means that many employees are entitled to five weeks’ holiday. The holiday year follows the calendar year.
Employees aged over 60 are entitled to an extra holiday week." Arguably, the business
community there is socially conscious:
"Joining a trade union is standard practice in Norway. This is viewed as a positive thing by both employers and employees. The organisation level is approx. 50%. The figure varies widely between industries and between the private and the public sector." A review of their health
care indicates typical European
'cradle to grave' single payer.
For former Vikings, they are a peaceable folk, spending 0.92%
GDP on foreign aid (US-0.14%)
A small homogenous population has
its advantages, but we may imagine there are problems as well.
A lot of people think that these Scandinavian countries are absolute bastions of socialism and they really aren't. I mentioned that Norway came in at 31 and 31 with the 2 main economic freedom indicators and, guess what, Denmark came in at 9 (with Heritage) and 14 (with Fraser), respectively (Sweden was somewhere in between Norway and Denmark). These countries are significantly less regulated (regulation and insane licensing requirements being major barriers to entry in a lot of these socialist leaning countries) than people think and their corporate income tax rates are low.
That's the good news. The bad news is that all of these countries are going to be facing the same day of reckoning that we are in terms of entitlements, pensions, etc. and if in fact they don't significantly reform even more than they already have, there will be hell to pay.
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