Norway On My Mind

We watched Michael Moore's Sicko tonight - if I get a chance tomorrow, I may post a review of it over at The Studio - and one of the special features on the DVD was called "This Country's Better Than France." It was all about Norway, and included a brief mention of their fiscal handling of the oil resources that have been rolling a lot of money into the country over the past decade and a half. That reminded Vicki of a newspaper article that she'd just read on the topic, which she then went looking for online.

Here's a link to that write-up although I don't know if the Globe and Mail keeps their articles around indefinitely. Among the more interesting sections of the piece are:

"While it isn't hard for nations and provinces to get rich from oil, it is exceptionally hard – almost impossible, by conventional economic reasoning – for them to make money off anything else while the oil boom is taking place.

Everywhere else in the world – including Canada – a boom in oil has led to a decline, if not a complete devastation, of conventional businesses. It's a phenomenon known to economists as “Dutch disease,” after the tragic experience of the Netherlands, which discovered oil in the 1970s. As oil exports boomed, the flood of money into the domestic economy inflated the currency, provoked price increases and destroyed exports, leading to a decade of joblessness and rising inequality."

and

"The Management Rule is the heart of Norway's economic miracle. It is a profound act of self-discipline: All but 4 per cent of Norway's oil earnings must be placed in the fund for savings; nothing can be withdrawn from the fund until the oil is gone, decades from now; and – most crucially – absolutely none of the money can be invested inside Norway. Mr. Slyngstad and his traders spend their days funnelling the oil wealth into foreign stocks and bonds, so none of it will touch the Norwegian economy."

There's a lot more to the Norwegian situation covered at the Globe and Mail site, and I encourage everyone to check out the link and see for themselves.

As I said to Vicki after reading the article, that's the sort of frugal approach to finances that I can relate to! Rather than gorging on the money during the brief period in which it's coming in, they're basically leveraging that burst of wealth to provide for themselves and the next several generations to come. And they're not artificially inflating their own economy in the short term, which seems to be the normal pattern with countries that have discovered oil in the past seventy five years. I like to think that, on a much smaller and less complex scale, that's sort of the way Vicki and I have handled our money, too.