Norwegian Socialist Prosperity?
Proponents of central planning like to point to examples of countries, like Norway, who are allegedly experiencing not only a high standard of living but also the country practices socialism and is prosperous. Back in 2009 The New York Times published a profile of Norway pointing out that, thanks to its socialist policies, Norway was able to successfully weather the economic downturn seen as of late.
The article points out that Norway’s finance minister directed its sovereign wealth to ramp up spending to acquire more stock in private investments to $60 billion which is equal to 23 percent of the country’s output. Norway might do well economically, but it is not due to the socialist policies The Times profiles and seems to talk up.
Upon reading the Heritage Foundation’s Index of Economic Freedom, the study’s profile of Norway one can conclude that Norway’s prosperity is not entirely due to, what The Times calls, its fiscal conservatism. Rather, as the study points out, it is due to its government trying to introduce measures that will enable its markets to create prosperity by freeing its economy. Also, government spending in the country is high not only due to its welfare programs but also as a result of its ownership of various industries.
Some of the industries the Norwegian government owns is its banking system and an oil company the government started in 1972 that gives the government a monopoly on oil sale and production. The government also owns Norway’s telecommunications network, an electricity company and a coal mining company with a variety of stake ownership in up to 150 Norwegian-based companies through its Industrial Development Corporation.
Despite relatively low oil prices, oil sales makes it very lucrative for politicians to dip into its sovereign wealth funds to maintain and expand Norway’s welfare state. With these features, one would think that Norway would be a stagnant country. Far from it and the country is nowhere near the free economy of the United States.
Unlike the United States, Norway is the prime example of a mixed economy. Norwegian bureaucrats regulate markets much more extensively with indirect ownership in them than the United States while lavishly spending tax money on cradle-to-grave welfare programs. Any prosperity enjoyed by Norway is the result of government spending not the result of a lack of interference in the economy or fiscal prudence.
With the usage of tax money to acquire more stock in companies the Norwegian government has ownership in and massive welfare spending creates a false sense of prosperity no different when the Federal Reserve churned up the printing presses by encouraging its member banks to create or lend more prior to the housing market bubble burst.
Yet despite its small statistical dips in categories such as government spending, labor freedom, fiscal freedom and government size, the United States still does better. Not only because it is the largest economy in the world but also due to its economic freedom.
Norway primes its economy’s pump with spending and debt which is an expansion of the money supply along with having higher and different forms of taxes making it one of the most expensive places in the world to live. Despite the Obama Administration’s tax, spending, and regulatory policies, the United States (for the most part) still maintains a somewhat hands-off approach to economic affairs.
An example being the lack of ownership the U.S. government has in its key industries. Despite the initial majority interest in General Motors, fortunately the Obama Administration resisted calls during the turmoil going on at GM for the U.S. to nationalize its banks. At best, both countries could take some lessons from Hong Kong. The Chinese territory, to this day the territory still ranks as the most prosperous economy on earth which is due to its laissez faire approach to its economy.
Otherwise, it is clear why the United States is far superior to Norway in terms of economic freedom and of the two, I will take the United States. However, because the United States took a hit from the housing bubble burst is not indicative that anything is wrong. The economic slump the U.S. is experiencing is a the result of Obama heavily intervening in markets which produce economic stagnation and unemployment.
Any prosperity Norway or other countries who conduct themselves in a similar manner experience and the economic downturn the United States is in demonstrates the moral bankruptcy of socialist central planning. Not its superiority as alleged by proponents of socialism or sympathetic media outlets like The New York Times.