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An Iraqi who saved Norway from oil (2009)

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Re: An Iraqi who saved Norway from oil (2009)

#61

Post by billyruffian »

heurisko wrote: post #52

The UK also benefitted from North Sea oil, but unlike the Norwegians, we don't have a sovereign wealth fund. Some suggest the money raised went towards tax cuts and contributed to house price inflation. [1] Although I'm not sure about house price inflation, as there has been similar inflation in Canada and Australia. [1] https://www.theguardian.com/commentisfree/2014/jan/13/north-...

It really rescued Britain from the financial mire it found itself in the mid 70s when the country was bust and had to go the IMF. It paid for the economic restructuring which was desperately needed. Dominic Sandbrook's books (Seasons in the Sun: Battle for Britain, 1974-1979 and Who Dares Wins: Britain, 1979-1982) cover this in some detail.

Re: An Iraqi who saved Norway from oil (2009)

#62

Post by billyruffian »

ggm wrote: post #17
drekipus wrote: post #10

Earlier quoted context omitted.

What is this comment even meant to convey? The post is about a person who has foresignt and self-determination, what is Australia meant to do about it? Further, Australia is a lot more isolated than Norway. (Australian BTW)

Australia like Britain, did not use Oil royalties to establish abiding sovereign funds to persist after the oil ran out. Instead, the royalty stream has been used to draw down debt, and to replace taxation as an income stream in the present, but oftentimes has led to wasted spend on vanity projects, or on build out of infrastructure purely for extractive industry (mining, oil, gas) which in turn is hoped to generate…

> Now scotland has independent tax raising powers, the border with england for sea resources was carefully restruck to favour england

The maritime border used to be a straight east-west line despite the east coast of England being curved. In 1999 it was changed so that it followed established international maritime border conventions regarding distances from the mainland[0].

[0] https://en.wikipedia.org/wiki/Scottish_Adjacent_Waters_Bound...

Re: An Iraqi who saved Norway from oil (2009)

#63

Post by wintermutestwin »

mrDmrTmrJ wrote: post #25
wintermutestwin wrote: post #18

Earlier quoted context omitted.

Compare and contrast US/Brit actions when: a) Norway nationalizes their oil b)Iran nationalizes their oil.

The idea that strong currency, due to oil exports, kills a manufacturing sector is named the "Dutch Disease" after the Netherlands experience post 1977. https://en.wikipedia.org/wiki/Dutch_disease So a country without colonial intervention was still severely harmed. I'd argue similar dynamics apply to resource intensive US states - e.g. West Virginia. The article is largely about how an Iraqi helped Norway avoid the…

Thanks for the high value response!

I was less trying to make a bumpersticker point and more fishing for interesting perspectives like these to broaden my understanding of complex political/economic issues.

Re: An Iraqi who saved Norway from oil (2009)

#64

Post by ggm »

billyruffian wrote: post #62
ggm wrote: post #17

Earlier quoted context omitted.

Australia like Britain, did not use Oil royalties to establish abiding sovereign funds to persist after the oil ran out. Instead, the royalty stream has been used to draw down debt, and to replace taxation as an income stream in the present, but oftentimes has led to wasted spend on vanity projects, or on build out of infrastructure purely for extractive industry (mining, oil, gas) which in turn is hoped to generate…

> Now scotland has independent tax raising powers, the border with england for sea resources was carefully restruck to favour england The maritime border used to be a straight east-west line despite the east coast of England being curved. In 1999 it was changed so that it followed established international maritime border conventions regarding distances from the mainland[0]. [0] https://en.wikipedia.org/wiki/Scottish…

You believe the change was motivated purely by geographical norms? It was legal on geographical grounds but was obviously motivated on assets and revenue.

Re: An Iraqi who saved Norway from oil (2009)

#65

Post by throw0101a »

ayngg wrote: post #23
AlexCoventry wrote: post #15

Earlier quoted context omitted.

Alberta's sovereign wealth fund is worth $18B according to the video, IIRC, whereas Norway's is worth $1.45T.

A big difference is that Norway is a sovereign state and didn't have to deal with federal and inter-provincial politics like Alberta did. I have my doubts about whether or not a federal government that has done something like the National Energy Program would allow a province within their country to hold a sovereign wealth fund worth hundreds of billions, or even over a trillion dollars.

> A big difference is that Norway is a sovereign state and didn't have to deal with federal and inter-provincial politics like Alberta did.

As I understand it the Alberta Fund is completely controlled by the province. There is some national policies, especially with exports, that falls under the Feds, but how much (or little) flows into the Fund is completely up to the province.

It is on Alberta itself that it decided to have low/er provincial income taxes and no provincial sales tax. Those things were 'funded' by the resource revenues, which effectively came a sort-of cheque to the habitants of the province. And when oil prices went down, government funded went sideways.

IMHO Alberta shouldn't blame Ottawa for not setting aside something for a rainy day.

Re: An Iraqi who saved Norway from oil (2009)

#66

Post by throw0101a »

soperj wrote: post #51
thedmstdmstdmst wrote: post #47

Earlier quoted context omitted.

> would allow a province within their country to hold a sovereign wealth fund worth hundreds of billions, or even over a trillion dollars. This is Alberta we are talking about? If in your hypothetical the Federal Government didn't mess it up the Province would.

They're the only province to run a balanced budget for last 50 years.

Alberta has had plenty of deficits in the last 10 years, never mind the last fifty:

* https://www.fraserinstitute.org/fr/node/9227

And they're not the only ones to be positive, as Ontario has had several surpluses or small deficits ($200M):

* https://en.wikipedia.org/wiki/Ontario_government_debt

This of course assumes that a balanced budget (or surplus) is something that even should be aimed for. Certainly one shouldn't go crazy with spending (especially when stimulus isn't needed), but the balanced idea seems to be a strange fiscal fetish that is over-focused upon.

Re: An Iraqi who saved Norway from oil (2009)

#67

Post by djrobstep »

somedangedname wrote: post #6

As a citizen of resource rich Australia this story of foresight and self-determination in a nation just about makes me weep.

Australia has an even bigger tragedy in this area: The superannuation system, which could have been a sovereign wealth fund 3x the size of Norway's, but instead was set up as individual accounts that privatize wealth instead of make it public, and amplify inequality instead of reduce it.

Re: An Iraqi who saved Norway from oil (2009)

#68

Post by djrobstep »

alexitorg wrote: post #27
somedangedname wrote: post #6

As a citizen of resource rich Australia this story of foresight and self-determination in a nation just about makes me weep.

I am not sure that comparing only sovereign wealth funds per capita tells the whole story. For instance Australia has a lot more private wealth saved up than Norway. At a lower GINI coefficient as well! I am also not sure that the major resource exports like iron ore and coal have the same ability to extract cartel rent extraction of oil, which is a lot more concentrated in the world. https://en.wikipedia.org/wiki/Li…

Australia's superannuation system is a disaster.

Compared to Norway's SWF:

- Fees are 20x larger as a proportion of AUM ($30 billion a year, nearly as much as the military budget, and 2x what the country spends on electricity)

- The assets are overwhelmingly owned by people who are already rich (Norway's SWF shares the wealth equally)

- Super has totally failed to prevent retirement poverty (elderly single women are the most impoverished demographic in Australia).

Re: An Iraqi who saved Norway from oil (2009)

#69

Post by rsj_hn »

djrobstep wrote: post #68
alexitorg wrote: post #27

Earlier quoted context omitted.

I am not sure that comparing only sovereign wealth funds per capita tells the whole story. For instance Australia has a lot more private wealth saved up than Norway. At a lower GINI coefficient as well! I am also not sure that the major resource exports like iron ore and coal have the same ability to extract cartel rent extraction of oil, which is a lot more concentrated in the world. https://en.wikipedia.org/wiki/Li…

Australia's superannuation system is a disaster. Compared to Norway's SWF: - Fees are 20x larger as a proportion of AUM ($30 billion a year, nearly as much as the military budget, and 2x what the country spends on electricity) - The assets are overwhelmingly owned by people who are already rich (Norway's SWF shares the wealth equally) - Super has totally failed to prevent retirement poverty (elderly single women are…

Norway has a 1.4 trillion dollars in oil wealth. In Australia individuals save for their own retirement. Comparing these two retirement funding mechanisms on the basis of how much individuals benefit and transaction cost per AUM isn't sensible.

Obviously being given free oil money is better than needing to save.

Re: An Iraqi who saved Norway from oil (2009)

#70

Post by djrobstep »

rsj_hn wrote: post #69
djrobstep wrote: post #68

Earlier quoted context omitted.

Australia's superannuation system is a disaster. Compared to Norway's SWF: - Fees are 20x larger as a proportion of AUM ($30 billion a year, nearly as much as the military budget, and 2x what the country spends on electricity) - The assets are overwhelmingly owned by people who are already rich (Norway's SWF shares the wealth equally) - Super has totally failed to prevent retirement poverty (elderly single women are…

Norway has a 1.4 trillion dollars in oil wealth. In Australia individuals save for their own retirement. Comparing these two retirement funding mechanisms on the basis of how much individuals benefit and transaction cost per AUM isn't sensible. Obviously being given free oil money is better than needing to save.

I don't understand your point at all. Both are very similar pools of assets. Why is it inappropriate to compare management costs and distributional outcomes between the two?
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