Whenever I talk about the inevitable failure of socialism, my leftist friends always bring up the Scandinavian countries–Norway in particular. “It works very well in Norway,” they always say in a snide tone of voice. (Okay, Norway is really a super-high taxation and cradle-to-grave capitalist country – but it’s frankly socialism in disguise.)
What they forget to mention is that Norway is the largest crude oil producer in Western Europe. Heck, even Oprah traveled to Scandinavia a few years ago to do a show on who she called “The Happiest People on Earth.” (She was speaking primarily of Denmark, which has a large oil and gas industry as well.)
What my liberal friends always conveniently fail to mention is that Norway has an almost-trillion dollar sovereign wealth fund that represents almost two-hundred thousand dollars for each Norwegian. About one-third of the federal budget of Norway comes from oil and gas revenue, siphoned off from the sovereign wealth fund. We have a similar situation in Alaska, where there are no sales or income tax–and the state pays residents several thousand dollars a year to live there.
The question is, would Norwegians be so happy without oil? We may find out the answer to this question over the next several decades. Norwegian oil production has been falling for years, from a high of over three-million barrels daily to significantly less that two million barrels today.
With the price of crude plummeting from $110 to almost $60 a barrel, the Norwegian central bank is now warning of a severe economic downturn. Offshore oil rigs are being idled, and ten percent of the employees in the Norwegian oil sector have been laid off recently–and the pain is only just starting. The Wall Street Journal reports: “Oil workers are threatening to strike unless the government steps in to stem further losses.”
So with declining oil production and a severe downturn in the price of Norway’s enabling natural resource, will socialism still thrive in Norway? Without a tradition of entrepreneurship and aggressive capitalism and a population that is used to lots of free stuff, it remains to be seen if their economy can successfully transition to a post-oil era.
Norway has been successful in managing their economy for decades, but it’s about to get a lot harder. And, they do have a trillion dollars in the bank to cushion the blow.
However, it may take a new generation of Norwegians to really transition their economy to a more capitalist model to create growth in the absence of the hydrocarbon crutch. The current population may just be too set in their warm socialist nest.
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This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom