An Iraqi who saved Norway from oil (2009)(ft.com)
ft.com
An Iraqi who saved Norway from oil (2009)
https://www.ft.com/content/99680a04-92a0-11de-b63b-00144feabdc0
81 comments
https://archive.md/lXaze
NPR's Planet Money also did an excellent segment on Farouk Al-Kasim, back in 2011. Text article and audio below:
https://www.npr.org/sections/money/2011/09/06/140110346/how-...
https://www.npr.org/sections/money/2011/09/06/140110346/how-...
Related, a recent video from PolyMatter titled Why Oil Doesn't Corrupt Norway:
https://www.youtube.com/watch?v=zu8ClwrTpbA
https://www.youtube.com/watch?v=zu8ClwrTpbA
Canada, US, China
Three of the six largest oil producers. Norway's lack of suffering from the so called resource curse isn't that special. What's special about Norway is their privilege to control so much oil with such a small population, quite similar to the sheiks of the Middle East (who have often made their people quite wealthy compared to their less oil fortunate neighbors, as in the case of Saudi Arabia, Kuwait or UAE). No coincidence Norway is also still a backwards monarchy that installs a king as head of state after a thousand years.
Three of the six largest oil producers. Norway's lack of suffering from the so called resource curse isn't that special. What's special about Norway is their privilege to control so much oil with such a small population, quite similar to the sheiks of the Middle East (who have often made their people quite wealthy compared to their less oil fortunate neighbors, as in the case of Saudi Arabia, Kuwait or UAE). No coincidence Norway is also still a backwards monarchy that installs a king as head of state after a thousand years.
> still a backwards monarchy that installs a king as head of state
Our royal family is there mostly just for show. Lots of us walk past the castle on our constitution day and wave to the king and the rest of his family and they wave back. Over the remainder of the year they hold some speeches, attend some openings and other events.
We are a democracy, and the power that is given to our king in the Norwegian constitution of 1814, has actually been managed by the government instead for a long time since then.
The function of our monarchy is largely one of ceremonial nature these days.
There was a vote in stortinget a couple of years ago over whether to disband or retain the monarchy. 36 representatives vote for disbanding the monarchy, and 130 representatives voted for keeping it. I think this is reflective of the overall attitude that we have of our monarchy; some are against it but the majority wants to keep it.
Our royal family is there mostly just for show. Lots of us walk past the castle on our constitution day and wave to the king and the rest of his family and they wave back. Over the remainder of the year they hold some speeches, attend some openings and other events.
We are a democracy, and the power that is given to our king in the Norwegian constitution of 1814, has actually been managed by the government instead for a long time since then.
The function of our monarchy is largely one of ceremonial nature these days.
There was a vote in stortinget a couple of years ago over whether to disband or retain the monarchy. 36 representatives vote for disbanding the monarchy, and 130 representatives voted for keeping it. I think this is reflective of the overall attitude that we have of our monarchy; some are against it but the majority wants to keep it.
People don't seem to understand the concept of constitutional monarchy, and mistakenly believe that the King or Queen in such setups wield power. They are just titular heads of states in a democratic state where the elected representatives and the government hold the real power.
However, I'd say the United Kingdom is an exception here as the Queen still has a lot of power, legally, many of which they have never exercised (atleast in a public manner).
Some weird quirks include not needing a license to drive or not requiring a passport for international travel. She doesn't need to pay taxes (but does pay some). Apparently the Queen of England also owns all Swans in around river Thames and all the Whales / Dolphins in British waters.
More serious powers include being immune to prosecution, exception from Freedom of Information Request, the ability to over rule ministry decisions (in case of emergency or constitutional crisis), the ability to dismiss a government and call for an election. Any law affecting the monarchy requires the "Queens consent" before it can be debated in Parliament or the Queen can also refuse her assent to discuss a particular bill in parliament. She is the Commander-in-Chief of the entire UK military and has the power to order a nuclear strike.
(Ofcourse, in recent decades, it is understood that most of these powers should only be exercised under the advice of the elected government, but that is not how the laws are written and framed. All in all, I'd say she is the most brilliant politician of the 20th century to hold on to power for so long.)
However, I'd say the United Kingdom is an exception here as the Queen still has a lot of power, legally, many of which they have never exercised (atleast in a public manner).
Some weird quirks include not needing a license to drive or not requiring a passport for international travel. She doesn't need to pay taxes (but does pay some). Apparently the Queen of England also owns all Swans in around river Thames and all the Whales / Dolphins in British waters.
More serious powers include being immune to prosecution, exception from Freedom of Information Request, the ability to over rule ministry decisions (in case of emergency or constitutional crisis), the ability to dismiss a government and call for an election. Any law affecting the monarchy requires the "Queens consent" before it can be debated in Parliament or the Queen can also refuse her assent to discuss a particular bill in parliament. She is the Commander-in-Chief of the entire UK military and has the power to order a nuclear strike.
(Ofcourse, in recent decades, it is understood that most of these powers should only be exercised under the advice of the elected government, but that is not how the laws are written and framed. All in all, I'd say she is the most brilliant politician of the 20th century to hold on to power for so long.)
Some of that is correct, the Queen has soverign immunity (a bit wider in scope than, say, the immunity afforded US presidents), and her household has excemption from some laws.
Some of the power you are referring to is the Royal Perogative in which the monarch is important constitutionally but not practically because the use of the Perogative is reserved for the Prime Minister.
Some of the things you mention, such as 'owning' swans and dolphins are not the possession of the Queen as a person (she can't sell them) but the Crown which is almost a deliberately confusing term that means the state. We'd talk about Crown buildings rather than government buildings for example.
Britan has a deliberately confusing unwritten constitution which works well much of the time and while we like to use language which makes it seem that the monarch has lots of power they really don't. The Queen absolutely does not have a nuclear button nor can she nuke anyone. The power to go to war used to be a Royal Perogative (the PM could declare war) but even this is now lost after adventures in Iraq and requires assent by parliament. Here you are confusing a symbolic role for a commanding role.
Some of the power you are referring to is the Royal Perogative in which the monarch is important constitutionally but not practically because the use of the Perogative is reserved for the Prime Minister.
Some of the things you mention, such as 'owning' swans and dolphins are not the possession of the Queen as a person (she can't sell them) but the Crown which is almost a deliberately confusing term that means the state. We'd talk about Crown buildings rather than government buildings for example.
Britan has a deliberately confusing unwritten constitution which works well much of the time and while we like to use language which makes it seem that the monarch has lots of power they really don't. The Queen absolutely does not have a nuclear button nor can she nuke anyone. The power to go to war used to be a Royal Perogative (the PM could declare war) but even this is now lost after adventures in Iraq and requires assent by parliament. Here you are confusing a symbolic role for a commanding role.
I didn't know about the crown / state context, and that makes more sense than the Queen herself owning the Swans and Dolphins. :)
But no, I am not confused about the symbolic roles vs what is written in law.
I am an indian and our current Parliamentary system is a British legacy. We understood the need of a titular role like the Queen in our system, and thus created the position of the President for it. So in India, everything happens in the name of the President of India. E.g. A law becomes a law only if the President signs it. However, our constitution clearly defines the role and the post has no real power over the Executive, Parliament or the Judiciary.
Personally, my perception of the British monarchy has been that the laws assigning the power to the monarchy, as it was then written gives them a lot of power. But it is only in the last 3 - 4 decades that they are being interpreted more "democratically" in modern parliamentary traditions (a reflection of the changing times). And thus it is being taken to mean that all her powers can only be exercised "under the advise of the cabinet", even if some of the laws don't explicitly state that. (As you rightly pointed out, the lack of a written constitution is a very interesting feature of the British system, as it allows for a more "flexible" interpretation of the law by the courts).
Interestingly, unlike in the indian system, a Queen can actually refuse to sign a bill into law. (In India, it is clearly spelled out that the President can refuse to sign a bill into law and send it back to the parliament with his objections. But if it is sent back again, the President has no choice but to sign and make it a law). So in theory, the Queen can over rule any law abolishing the monarchy or its role in the British system! There's also enough leeway, in theory, in the laws for the Queen to assume full power anytime in the future as the Queen can dismiss an elected government and elections can only be held when the Queen calls for it.
> The power to go to war used to be a Royal Perogative (the PM could declare war) but even this is now lost after adventures in Iraq and requires assent by parliament.
If I remember right, didn't the Queen refuse to give her assent to table this bill to the Parliament? (One of the rare times she exercised this power).
But no, I am not confused about the symbolic roles vs what is written in law.
I am an indian and our current Parliamentary system is a British legacy. We understood the need of a titular role like the Queen in our system, and thus created the position of the President for it. So in India, everything happens in the name of the President of India. E.g. A law becomes a law only if the President signs it. However, our constitution clearly defines the role and the post has no real power over the Executive, Parliament or the Judiciary.
Personally, my perception of the British monarchy has been that the laws assigning the power to the monarchy, as it was then written gives them a lot of power. But it is only in the last 3 - 4 decades that they are being interpreted more "democratically" in modern parliamentary traditions (a reflection of the changing times). And thus it is being taken to mean that all her powers can only be exercised "under the advise of the cabinet", even if some of the laws don't explicitly state that. (As you rightly pointed out, the lack of a written constitution is a very interesting feature of the British system, as it allows for a more "flexible" interpretation of the law by the courts).
Interestingly, unlike in the indian system, a Queen can actually refuse to sign a bill into law. (In India, it is clearly spelled out that the President can refuse to sign a bill into law and send it back to the parliament with his objections. But if it is sent back again, the President has no choice but to sign and make it a law). So in theory, the Queen can over rule any law abolishing the monarchy or its role in the British system! There's also enough leeway, in theory, in the laws for the Queen to assume full power anytime in the future as the Queen can dismiss an elected government and elections can only be held when the Queen calls for it.
> The power to go to war used to be a Royal Perogative (the PM could declare war) but even this is now lost after adventures in Iraq and requires assent by parliament.
If I remember right, didn't the Queen refuse to give her assent to table this bill to the Parliament? (One of the rare times she exercised this power).
In one instance the Queen completely vetoed the Military Actions Against Iraq Bill in 1999, a private member's bill that sought to transfer the power to authorise military strikes against Iraq from the monarch to parliament.
> If I remember right, didn't the Queen refuse to give her assent to table this bill to the Parliament?
The Queen, acting upon the advice of her government, refused to grant her consent for the Bill to be debated.
You see how this works? The Queen didn't just decide for herself.
Parliament is sovereign, it can vote to do away with any of these customs and traditions at any time it likes. But we like custom and tradition, it's part of our culture.
> it is only in the last 3 - 4 decades that they are being interpreted more "democratically" in modern parliamentary traditions
That is a ridiculously narrow view. There have been plenty of times we've had constitutional crises. We have an election to resolve them, such as the 1909 finance bill that resolved the issue of which chamber was supreme.
The Queen, acting upon the advice of her government, refused to grant her consent for the Bill to be debated.
You see how this works? The Queen didn't just decide for herself.
Parliament is sovereign, it can vote to do away with any of these customs and traditions at any time it likes. But we like custom and tradition, it's part of our culture.
> it is only in the last 3 - 4 decades that they are being interpreted more "democratically" in modern parliamentary traditions
That is a ridiculously narrow view. There have been plenty of times we've had constitutional crises. We have an election to resolve them, such as the 1909 finance bill that resolved the issue of which chamber was supreme.
What you say is also largely true of the British, Canadian, Australian, etc. monarchy.
Norway handled their oil way better than any of the Gulf monarchies did.
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.
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.
I am not saying that there is blame or not, it isn't so much blame as recognizing that there are different circumstances between Alberta and Norway that influenced the direction they went.
The big example is the National Energy Program which (aside from its economic impact on the province) basically tainted politics in Alberta and probably contributed to their hesitancy to contribute to a fund which could potentially be raided by the Federal government in the future.
The big example is the National Energy Program which (aside from its economic impact on the province) basically tainted politics in Alberta and probably contributed to their hesitancy to contribute to a fund which could potentially be raided by the Federal government in the future.
> 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.
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.
* 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.
Canada and Norway are constitutional monarchies and can not be compared to countries where the monarchs have real power.
This story was mentioned on a related discussion 2.5 weeks ago:
· Norway is wealthy because of oil. Can it give up fossil fuels? | https://news.ycombinator.com/item?id=28576597#28577318 | 50 points | 66 comments
The previous discussion was also spawned in similar fashion:
· https://news.ycombinator.com/item?id=19594153 | 347 points | April 7, 2019 | 129 comments
· Battery Reality: There’s Nothing Better Than Lithium-Ion Coming Soon | https://news.ycombinator.com/item?id=19590854#19593054 | 443 points | April 6, 2019 | 249 comments
· Norway is wealthy because of oil. Can it give up fossil fuels? | https://news.ycombinator.com/item?id=28576597#28577318 | 50 points | 66 comments
The previous discussion was also spawned in similar fashion:
· https://news.ycombinator.com/item?id=19594153 | 347 points | April 7, 2019 | 129 comments
· Battery Reality: There’s Nothing Better Than Lithium-Ion Coming Soon | https://news.ycombinator.com/item?id=19590854#19593054 | 443 points | April 6, 2019 | 249 comments
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/List_of_countries_by_wealth_pe...
Wealth per capita $USD 2021:
Country Median Mean
Australia 238k 484k
Norway 118k 276k
The Australian compulsory super-annuation scheme has made Australian long term pension sustainability much better than the rest of the world. How much of the wealth that could have gone into a sovereign fund has gone into private savings instead? I don't know if Norway or Australia did better.
Is doing well be a bar against doing better? The wealthy have no hangups about taking profit so why should the rest of us?
Mining activity is 10% of Australia's GDP. Mineral land rights in Australia are property of the government so why do overseas and private-domestic operators get to make all the profit? When Norway's example shows us that a publicly funded and owned industry was possible!
Too late now though - the last attempt to extract more value out of a booming industry led to the downfall of the government: https://en.wikipedia.org/wiki/Minerals_Resource_Rent_Tax.
Mining activity is 10% of Australia's GDP. Mineral land rights in Australia are property of the government so why do overseas and private-domestic operators get to make all the profit? When Norway's example shows us that a publicly funded and owned industry was possible!
Too late now though - the last attempt to extract more value out of a booming industry led to the downfall of the government: https://en.wikipedia.org/wiki/Minerals_Resource_Rent_Tax.
> For instance Australia has a lot more private wealth saved up than Norway. At a lower GINI coefficient as well!
This is demonstrably false: https://data.oecd.org/chart/6tTs
This is demonstrably false: https://data.oecd.org/chart/6tTs
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).
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).
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.
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?
> I don't understand your point at all. Both are very similar pools of assets.
OK, let me explain it. Yes, the assets owned by both funds are financial assets that are comparable. They both own bonds and corporate shares, etc. But the issue is not what assets are in the funds.
When you are given lots of money, this reduces poverty much more than when an individual gets a tax break on saving their own money. Norway has trillions in oil reserves to support a small population. I am not sure why I need to explain this, but having a trillion dollar windfall reduces poverty much more effectively than subsidizing the savings of each individual.
Moreover, when you save each pay period you have to make lots of small little asset purchases, as opposed to making huge purchases in a SWF fund in which the money comes from selling oil, so transaction costs are higher in a 401K style system than when you are sitting on an ocean of free oil.
OK, let me explain it. Yes, the assets owned by both funds are financial assets that are comparable. They both own bonds and corporate shares, etc. But the issue is not what assets are in the funds.
When you are given lots of money, this reduces poverty much more than when an individual gets a tax break on saving their own money. Norway has trillions in oil reserves to support a small population. I am not sure why I need to explain this, but having a trillion dollar windfall reduces poverty much more effectively than subsidizing the savings of each individual.
Moreover, when you save each pay period you have to make lots of small little asset purchases, as opposed to making huge purchases in a SWF fund in which the money comes from selling oil, so transaction costs are higher in a 401K style system than when you are sitting on an ocean of free oil.
> When you are given lots of money, this reduces poverty much more than when an individual gets a tax break on saving their own money.
That is what I am saying - If the $3 trillion in super were shared equally, poverty would be a lot lower. Keating himself says that he could have set the system up this way, but didn't because he wanted it to be a privatized system of individual ownership.
> Norway has trillions in oil reserves to support a small population.
Norway has $1 trillion in retirement savings to support a small population. Australia has $3 trillion in retirement savings to support a small population. What's the difference? Why does what asset class the money originally came from matter?
> I am not sure why I need to explain this, but having a trillion dollar windfall reduces poverty much more effectively than subsidizing the savings of each individual.
Once again, both countries have trillions in assets, that can be distributed in many possible ways. You can either distribute them equally and reduce inequality (Norway), or individually and make it worse (Australia).
> Moreover, when you save each pay period you have to make lots of small little asset purchases, as opposed to making huge purchases in a SWF fund in which the money comes from selling oil, so transaction costs are higher in a 401K style system than when you are sitting on an ocean of free oil.
That is not how super funds work (they don't make small asset purchases each time you make a deposit, they run a combined asset pool and just keep track of your allocation) and not why super fees are high. They are high because there are so many small funds which spend money advertising against each other and duplicating admin costs, instead of simply having one big fund like Norway does.
That is what I am saying - If the $3 trillion in super were shared equally, poverty would be a lot lower. Keating himself says that he could have set the system up this way, but didn't because he wanted it to be a privatized system of individual ownership.
> Norway has trillions in oil reserves to support a small population.
Norway has $1 trillion in retirement savings to support a small population. Australia has $3 trillion in retirement savings to support a small population. What's the difference? Why does what asset class the money originally came from matter?
> I am not sure why I need to explain this, but having a trillion dollar windfall reduces poverty much more effectively than subsidizing the savings of each individual.
Once again, both countries have trillions in assets, that can be distributed in many possible ways. You can either distribute them equally and reduce inequality (Norway), or individually and make it worse (Australia).
> Moreover, when you save each pay period you have to make lots of small little asset purchases, as opposed to making huge purchases in a SWF fund in which the money comes from selling oil, so transaction costs are higher in a 401K style system than when you are sitting on an ocean of free oil.
That is not how super funds work (they don't make small asset purchases each time you make a deposit, they run a combined asset pool and just keep track of your allocation) and not why super fees are high. They are high because there are so many small funds which spend money advertising against each other and duplicating admin costs, instead of simply having one big fund like Norway does.
> That is what I am saying - If the $3 trillion in super were shared equally,
Uhh, this is private property, the result of individual households setting aside a portion of their own wages to save for the future. It is not politically feasible for the government to seize private savings it had said were previously for your retirement.
What you want is a defined benefit federal savings program (like social security), but that needs to be funded by taxing incomes, not by seizing existing private retirement savings. Some nations have that and others don't, but it's not a sovereign wealth fund. Please don't confuse the two issues being discussed.
The first issue is whether the government should tax the economy and pay out fixed retirement benefits for everyone, or whether it should promote individuals saving for their own retirement, or some hybrid of the two. This decision has nothing to do with SWFs. Australia has a hybrid system, where households are expected to save for retirement but there are also welfare programs for low income people. Most nations follow this model because it is what the public supports politically and it makes a lot of economic sense.
SWFs, OTOH, are created when a nation gets some unexpected windfall that is short lived, and it wants to smooth the life of that windfall into the future. That is why you invest. Otherwise when the oil runs out, Norway will face a shock. This way, by transforming the oil into investments, Norway can provide a stream of benefits that lasts longer than the oil. That question of transforming benefits across time for the government has nothing to do with whether the government provides defined benefit retirement plans or not for households. This is because even though every household has to plan for retirement when it earns no income, governments do not need to plan for a future when they earn no tax revenue. It is only when you get these predictable revenue bumps, such as discovering you are sitting on a pot of oil, that create a need for the government to smooth revenue across time.
Now Australia does have mineral resources and it even taxes the extraction of those resources just as Norway taxes the extraction of oil. But in Australia, the extraction of coal and iron results in a much smaller surplus spread over a much larger population, and so Australia's mineral wealth, while large in absolute terms, does not support the same level of surplus income per person as Norway's oil wealth - which is not to say that Australia's economy is less dependent on extraction than Norway's. Australia is very much dependent on all the jobs that mining creates, but that is not surplus income, it is income that has to be earned with labor. Therefore when Australia's coal and iron run out, it will be a big shock, but there is nothing Australia can do to smooth that income out, since it's not surplus income. This is why Australia does not put the fees obtained from mining into a SWF - they wont help!
Therefore Australia uses the proceeds from taxing mineral extraction for general revenue, it does not put the money into a special SWF pot, whereas Norway does. Just as Canada doesn't put the money it obtains from selling trees or rocks into a special pot. That decision to not stretch the revenue across time has nothing to do with whether the government has a defined benefit retirement system for households.
Uhh, this is private property, the result of individual households setting aside a portion of their own wages to save for the future. It is not politically feasible for the government to seize private savings it had said were previously for your retirement.
What you want is a defined benefit federal savings program (like social security), but that needs to be funded by taxing incomes, not by seizing existing private retirement savings. Some nations have that and others don't, but it's not a sovereign wealth fund. Please don't confuse the two issues being discussed.
The first issue is whether the government should tax the economy and pay out fixed retirement benefits for everyone, or whether it should promote individuals saving for their own retirement, or some hybrid of the two. This decision has nothing to do with SWFs. Australia has a hybrid system, where households are expected to save for retirement but there are also welfare programs for low income people. Most nations follow this model because it is what the public supports politically and it makes a lot of economic sense.
SWFs, OTOH, are created when a nation gets some unexpected windfall that is short lived, and it wants to smooth the life of that windfall into the future. That is why you invest. Otherwise when the oil runs out, Norway will face a shock. This way, by transforming the oil into investments, Norway can provide a stream of benefits that lasts longer than the oil. That question of transforming benefits across time for the government has nothing to do with whether the government provides defined benefit retirement plans or not for households. This is because even though every household has to plan for retirement when it earns no income, governments do not need to plan for a future when they earn no tax revenue. It is only when you get these predictable revenue bumps, such as discovering you are sitting on a pot of oil, that create a need for the government to smooth revenue across time.
Now Australia does have mineral resources and it even taxes the extraction of those resources just as Norway taxes the extraction of oil. But in Australia, the extraction of coal and iron results in a much smaller surplus spread over a much larger population, and so Australia's mineral wealth, while large in absolute terms, does not support the same level of surplus income per person as Norway's oil wealth - which is not to say that Australia's economy is less dependent on extraction than Norway's. Australia is very much dependent on all the jobs that mining creates, but that is not surplus income, it is income that has to be earned with labor. Therefore when Australia's coal and iron run out, it will be a big shock, but there is nothing Australia can do to smooth that income out, since it's not surplus income. This is why Australia does not put the fees obtained from mining into a SWF - they wont help!
Therefore Australia uses the proceeds from taxing mineral extraction for general revenue, it does not put the money into a special SWF pot, whereas Norway does. Just as Canada doesn't put the money it obtains from selling trees or rocks into a special pot. That decision to not stretch the revenue across time has nothing to do with whether the government has a defined benefit retirement system for households.
> Uhh, this is private property, the result of individual households setting aside a portion of their own wages to save for the future.
Yes - and that was a terrible decision. Australia could have put super contributions into a collective pool, and used the money to increase equality and fund above-poverty-line universal pensions, but it didn't. Instead they put it in individually owned accounts - inequality and poverty is much higher in Australia as a consequence. Elderly women are the most impoverished demographic in the country.
> What you want is a defined benefit federal savings program (like social security), but that needs to be funded by taxing incomes, not by seizing existing private retirement savings.
No, what you want is a collective fund like Norway's - you are talking like this doesn't exist. It would be very straightforward to tax super balances (particularly large ones) and move money into a collective pool.
> Some nations have that and others don't, but it's not a sovereign wealth fund. Please don't confuse the two issues being discussed.
Norway's SWF is literally a pension fund, and explicitly has the goal of creating equally shared wealth.
> SWFs, OTOH, are created when a nation gets some unexpected windfall that is short lived, and it wants to smooth the life of that windfall into the future.
No, that is one reason SWFs are created, but there are many - Australia's own SWF for instance was not created for this reason.
> But in Australia, the extraction of coal and iron results in a much smaller surplus spread over a much larger population, and so Australia's mineral wealth, while large in absolute terms, does not support the same level of surplus income per person as Norway's oil wealth
If we lack the surplus income of Norway, how have we managed to create a pool of wealth 3x as big from surplus incomes, in spite of wasting much more of it on fees each year?
> Australia is very much dependent on all the jobs that mining creates, but that is not surplus income, it is income that has to be earned with labor.
This is incoherent - both oil and mining resources require labor to extract. There's nothing special about oil or resources compared to any other type of capital - you can make a fund out of any type of capital.
Yes - and that was a terrible decision. Australia could have put super contributions into a collective pool, and used the money to increase equality and fund above-poverty-line universal pensions, but it didn't. Instead they put it in individually owned accounts - inequality and poverty is much higher in Australia as a consequence. Elderly women are the most impoverished demographic in the country.
> What you want is a defined benefit federal savings program (like social security), but that needs to be funded by taxing incomes, not by seizing existing private retirement savings.
No, what you want is a collective fund like Norway's - you are talking like this doesn't exist. It would be very straightforward to tax super balances (particularly large ones) and move money into a collective pool.
> Some nations have that and others don't, but it's not a sovereign wealth fund. Please don't confuse the two issues being discussed.
Norway's SWF is literally a pension fund, and explicitly has the goal of creating equally shared wealth.
> SWFs, OTOH, are created when a nation gets some unexpected windfall that is short lived, and it wants to smooth the life of that windfall into the future.
No, that is one reason SWFs are created, but there are many - Australia's own SWF for instance was not created for this reason.
> But in Australia, the extraction of coal and iron results in a much smaller surplus spread over a much larger population, and so Australia's mineral wealth, while large in absolute terms, does not support the same level of surplus income per person as Norway's oil wealth
If we lack the surplus income of Norway, how have we managed to create a pool of wealth 3x as big from surplus incomes, in spite of wasting much more of it on fees each year?
> Australia is very much dependent on all the jobs that mining creates, but that is not surplus income, it is income that has to be earned with labor.
This is incoherent - both oil and mining resources require labor to extract. There's nothing special about oil or resources compared to any other type of capital - you can make a fund out of any type of capital.
> This is incoherent - both oil and mining resources require labor to extract.
Again, what is special about oil is that profits from extracting oil are very large, but the profits from mining coal are quite small. Therefore a nation sitting on a pile of coal has a great jobs program for employing coal miners, but not a lot of surplus industry income that can be taxed to give everyone in the country an extra 200K. A nation sitting on a vast pool of oil can do that.
> If we lack the surplus income of Norway, how have we managed to create a pool of wealth 3x as big from surplus incomes, in spite of wasting much more of it on fees each year?
Australia's large retirement funds are the result of a larger population saving for retirement. They are not obtained by taxing excess profits of the iron/coal industry, but by individual households cutting their spending and saving for retirement.
> Norway's SWF is literally a pension fund, and explicitly has the goal of creating equally shared wealth.
This is a non-sequitur. I am saying that we shouldn't confuse the policy goal of fixed versus individual savings programs with whether or not SWFs are used - as one is a retirement policy and the other is funding mechanism. A nation may want a defined pension but shouldn't have an SWF, or vice versa, or neither. The fact that you keep mixing them is not some rebuttal. It's like when I point out you shouldn't confuse colors with gender of animals, and you say "False, this is a blue, male bird!" At this point I have to disengage.
Again, what is special about oil is that profits from extracting oil are very large, but the profits from mining coal are quite small. Therefore a nation sitting on a pile of coal has a great jobs program for employing coal miners, but not a lot of surplus industry income that can be taxed to give everyone in the country an extra 200K. A nation sitting on a vast pool of oil can do that.
> If we lack the surplus income of Norway, how have we managed to create a pool of wealth 3x as big from surplus incomes, in spite of wasting much more of it on fees each year?
Australia's large retirement funds are the result of a larger population saving for retirement. They are not obtained by taxing excess profits of the iron/coal industry, but by individual households cutting their spending and saving for retirement.
> Norway's SWF is literally a pension fund, and explicitly has the goal of creating equally shared wealth.
This is a non-sequitur. I am saying that we shouldn't confuse the policy goal of fixed versus individual savings programs with whether or not SWFs are used - as one is a retirement policy and the other is funding mechanism. A nation may want a defined pension but shouldn't have an SWF, or vice versa, or neither. The fact that you keep mixing them is not some rebuttal. It's like when I point out you shouldn't confuse colors with gender of animals, and you say "False, this is a blue, male bird!" At this point I have to disengage.
> but not a lot of surplus industry income that can be taxed to give everyone in the country an extra 200K
Are you aware of how Australia's superannuation system works? Contributions are literally paid from company income. You are saying it would be impossible for Australia to save trillions from surplus income when this has already happened and is the basic design of the scheme!
Are you aware of how Australia's superannuation system works? Contributions are literally paid from company income. You are saying it would be impossible for Australia to save trillions from surplus income when this has already happened and is the basic design of the scheme!
Another part of the story is to compare the public mindedness of Farouk Al-Kasim with Gina Rinehart and Clive Palmer.
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.
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)
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)
I think it's meant to convey grief that Australia has allowed itself to be exploited by foreign miners, and waste the wealth that its natural resources could have generated.
hasn't Australia consistently had uninterrupted economic growth?
Australia has the highest median household wealth of any country in the world. https://www.statista.com/chart/19651/countries-with-highest-...
Australia has the highest median household wealth of any country in the world. https://www.statista.com/chart/19651/countries-with-highest-...
But its net debt is something like 40% of GDP, whereas Norway's is something like -110%.
https://knoema.com/atlas/Australia/topics/Economy/Financial-... https://knoema.com/atlas/Norway/topics/Economy/Financial-Sec...
https://knoema.com/atlas/Australia/topics/Economy/Financial-... https://knoema.com/atlas/Norway/topics/Economy/Financial-Sec...
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 revenue, but alas, not until a very long time in the future. Displaced costs in forward income estimates, much as in the movie industry, mean some mines and oilwells basically never pay tax, but generate collossal revenue which disappears into company consolidated debt. Its a huge rort of the model. There are royalties, but they are 'subverted' out of the picture.
"its scotland's oil" was about Maggie Thatcher, and how the revenue was spent. Now scotland has independent tax raising powers, the border with england for sea resources was carefully restruck to favour england (look on a map to the boundaries, they aren't what you might think)
Australia has soverign wealth funds. Just, not made with revenue from this kind of industry. This kind of industry dominates the political landscape and has impeded the uptake of solar and wind, and replacement of coal for power generation. I don't mean silently: this is a quite overt distortion, active, such that major corporates actually have withdrawn from the australian mining and minerals council because its like the NRA, single-issue distorting of the polity.
In the early 2000s an Australian labor government tried to raise a tax analogous to a petrol royalties and revenue tax, and was pretty much de-elected by sectional interests on the strength of industry opposition. (the PRRT exists. the MRRT was voted down)
Mining employs around 40,000 people in a nation of 25 million. Solar and Wind and Tourism would probably employ more people. But, the voting effects of mining establish a lock on our senate (and sometimes, lower house) which make it next to impossible to see change. The industry is running the government, at one remove.
I don't believe for a minute Norway is all peaches and cream, but it probably has a better sense of cohesion around its role in the world, and the benefits of the sovereign fund, and future money, and de-carbonising the economy. Norway was an extremely poor, -to the extent of massive nutritional death in winter-poor economy. It's moved the dial to a different place, and done it quite carefully, economically speaking. (Norwegian settlers in the USA and Canada came because of a potato famine)
We're envious. (well, the Australians who don't derive income directly from mining, oil or gas)
"its scotland's oil" was about Maggie Thatcher, and how the revenue was spent. Now scotland has independent tax raising powers, the border with england for sea resources was carefully restruck to favour england (look on a map to the boundaries, they aren't what you might think)
Australia has soverign wealth funds. Just, not made with revenue from this kind of industry. This kind of industry dominates the political landscape and has impeded the uptake of solar and wind, and replacement of coal for power generation. I don't mean silently: this is a quite overt distortion, active, such that major corporates actually have withdrawn from the australian mining and minerals council because its like the NRA, single-issue distorting of the polity.
In the early 2000s an Australian labor government tried to raise a tax analogous to a petrol royalties and revenue tax, and was pretty much de-elected by sectional interests on the strength of industry opposition. (the PRRT exists. the MRRT was voted down)
Mining employs around 40,000 people in a nation of 25 million. Solar and Wind and Tourism would probably employ more people. But, the voting effects of mining establish a lock on our senate (and sometimes, lower house) which make it next to impossible to see change. The industry is running the government, at one remove.
I don't believe for a minute Norway is all peaches and cream, but it probably has a better sense of cohesion around its role in the world, and the benefits of the sovereign fund, and future money, and de-carbonising the economy. Norway was an extremely poor, -to the extent of massive nutritional death in winter-poor economy. It's moved the dial to a different place, and done it quite carefully, economically speaking. (Norwegian settlers in the USA and Canada came because of a potato famine)
We're envious. (well, the Australians who don't derive income directly from mining, oil or gas)
> 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...
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...
You believe the change was motivated purely by geographical norms? It was legal on geographical grounds but was obviously motivated on assets and revenue.
I don't believe anything without evidence. It seems like a reasonable piece of tidying up that settles the legal juristiction of vessels in those waters but I look forward to seeing the evidence that it was a spiteful landgrab (watergrab?) so I can adjust my beliefs.
On balance, the maritime border appears to me to have been restruck to be fair.
On balance, the maritime border appears to me to have been restruck to be fair.
Here's a BBC piece from 2013: https://www.bbc.com/news/uk-scotland-scotland-politics-20042...
Here's a 2001 legal review from glasgow Caledonia university which obviously favours Scottish interests: https://academic.oup.com/ejil/article/12/1/77/359040?login=t...
Here's closing remarks from the SNP on a parliamentary debate, that shows the predominant driving factor was fisheries, and (if you read the rest of the debate) suggests a lot of confusion about what was being discussed and why): https://www.theyworkforyou.com/sp/?id=2000-04-26.9.0#g58.1
Here's two extremely partisan takes by a pro Indy scot who claims to have previously negotiated sea boundary changes. What's interesting is the "northward drift" : https://www.craigmurray.org.uk/archives/2017/01/scotlands-st...
https://www.craigmurray.org.uk/archives/2012/01/scotlandengl...
Here's a 2001 legal review from glasgow Caledonia university which obviously favours Scottish interests: https://academic.oup.com/ejil/article/12/1/77/359040?login=t...
Here's closing remarks from the SNP on a parliamentary debate, that shows the predominant driving factor was fisheries, and (if you read the rest of the debate) suggests a lot of confusion about what was being discussed and why): https://www.theyworkforyou.com/sp/?id=2000-04-26.9.0#g58.1
Here's two extremely partisan takes by a pro Indy scot who claims to have previously negotiated sea boundary changes. What's interesting is the "northward drift" : https://www.craigmurray.org.uk/archives/2017/01/scotlands-st...
https://www.craigmurray.org.uk/archives/2012/01/scotlandengl...
Thank you for taking the time to do that and I know we are drifting massively off-topic. The blogs posts fail the PROMPT test for me but the Zahraa, 2001 paper is much more interesting and makes a decent case that this isn't a settled issue and it probably should be sooner rather than later.
Sounds like Alberta, Canada. Same sickness.
> The post is about a person who has foresignt and self-determination, what is Australia meant to do about it?
Australia has done the opposite with their (our? I'm an ex-pat) natural resources.
Australia has done the opposite with their (our? I'm an ex-pat) natural resources.
“ But imagine how large our stock pile of toilet paper could be!”
What are you talking about? Australia hasn't had a recession in decades. Australia has done well with all the resources it stole from the aborigines. Most people living in australia has never experienced an economic downturn.
https://au.finance.yahoo.com/news/why-australia-hasnt-had-a-...
Australia hasn't had a recession since the early 90s and you are complaining?
https://au.finance.yahoo.com/news/why-australia-hasnt-had-a-...
Australia hasn't had a recession since the early 90s and you are complaining?
While you're absolutely correct that Australia hasn't had a recession in that time, this hides the fact that there have been periods when GDP _per-capita_ has declined. Or to put it another way: Australia's recessions have been hidden by immigration-driven growth.
Of course, immigration-driven growth is great! But for people on the ground, what matters is GDP per capita, not total GDP.
Of course, immigration-driven growth is great! But for people on the ground, what matters is GDP per capita, not total GDP.
> Of course, immigration-driven growth is great! But for people on the ground, what matters is GDP per capita, not total GDP.
If GDP per capita is what you are interested in, you don't want immigration as it increases the "capita" part.
Also, Australia's growth had nothing to do with immigration. It had everything to do with China and China's economic growth.
If GDP per capita is what you are interested in, you don't want immigration as it increases the "capita" part.
Also, Australia's growth had nothing to do with immigration. It had everything to do with China and China's economic growth.
Australia hasn't had a recession since the early 90s and you are complaining?
Just look at Norway as the example of how much better we could have done.
In turn, we wouldn't be lumbered with egregious mining billionaires like Clive Palmer and Gina Rinehart, who - among other monstrosities - heavily back climate-disruption denial.
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-...
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.
Great Article; What a serendipitous and fortunate occurrence for Norway !
Norwegians need to erect monuments to this guy and help other countries like he helped them.
Norwegians need to erect monuments to this guy and help other countries like he helped them.
How could al-Kasim be so sure that Norway would find oil?
North Sea oil exploration dates to the 1850s. The modern era began ~1964 with commercial offshore drilling.
That was four years before al-Kasim stopped by the office in 1968.
https://en.wikipedia.org/wiki/North_Sea_oil
That was four years before al-Kasim stopped by the office in 1968.
https://en.wikipedia.org/wiki/North_Sea_oil
He was not sure. They moved for family reasons, as described in one of the first few paragraphs of the article.
He was telling everyone who would listen that Norway would find oil, and needed to prepare itself.
> His was a lonely, contrarian voice. After examining exploration results, he wrote a report that warned Norway was sleeping, that even though no one had found oil yet, it was only a question of time. And time was short: the country’s leaders needed to prepare Norway to become an oil nation, but they were doing nothing. “I was a constant reminder that they were doing everything wrong,” al-Kasim says pointedly. Only his closest colleagues would listen.
> His was a lonely, contrarian voice. After examining exploration results, he wrote a report that warned Norway was sleeping, that even though no one had found oil yet, it was only a question of time. And time was short: the country’s leaders needed to prepare Norway to become an oil nation, but they were doing nothing. “I was a constant reminder that they were doing everything wrong,” al-Kasim says pointedly. Only his closest colleagues would listen.
I imagine he came to that conclusion only after he reviewed the exploration reports, maps, and other internal documents within the ministries.
I think he recognized from the exploration results that the local geology was very favorable even if they hadn't hit actual oil yet.
Amazing story!
As a complete tangent, I find it quite sad that because of things like the ft paywall, stories like this that are written today will be lost to the sands of time.
Does Norway use most of their oil money for social media adverts?
There is another self-congratulatory norway article on the frontpage.
"Norway to hit 100% electric vehicle sales by early next year"
https://news.ycombinator.com/item?id=28777672
There was another one just a few days ago.
"Norway bans gas cars in 2025 but trends point toward 100%EV sales as early April"
https://news.ycombinator.com/item?id=28629184
There have been so much nonsense about norway peddled online for the past decade that I roll my eyes when I read the headline.
There is another self-congratulatory norway article on the frontpage.
"Norway to hit 100% electric vehicle sales by early next year"
https://news.ycombinator.com/item?id=28777672
There was another one just a few days ago.
"Norway bans gas cars in 2025 but trends point toward 100%EV sales as early April"
https://news.ycombinator.com/item?id=28629184
There have been so much nonsense about norway peddled online for the past decade that I roll my eyes when I read the headline.
You are being uncharitable here.
While there might be a lot of nonsense peddled around, this article does not belong to that category. It is about one man who saw something that others didn't and convinced them to heed his advice to the betterment of the entire Nation.
While there might be a lot of nonsense peddled around, this article does not belong to that category. It is about one man who saw something that others didn't and convinced them to heed his advice to the betterment of the entire Nation.
Norway is a European country, that no Western gov would colonize or disrupt. This is the primary factor around avoiding “corruption” by oil. Developing countries get baited and coerced into extractive economies that benefit the developed ones - modern colonialism.
All this talk around foresight and smarts painfully ignores reality.
All this talk around foresight and smarts painfully ignores reality.
So Russia is colonized? Canada? Brazil? Heck the US for that matter?
You act as if the middle east is the only collection of countries beholden to oil exports, and the only countries making what would otherwise be considered short-sighted moves based on those exports.
You act as if the middle east is the only collection of countries beholden to oil exports, and the only countries making what would otherwise be considered short-sighted moves based on those exports.
> Canada? Brazil? Heck the US for that matter?
Yes to all three. How could you have forgotten the colonisation of North America?
Yes to all three. How could you have forgotten the colonisation of North America?
> is colonized?
It’s almost as if you’re being intentionally obtuse. The established term (that I used) is “modern” colonialism - it doesn’t necessarily involve physical colonization, rather systematic external control.
Russia has been tussling with the West for a prolonged period now. Regardless, they are the second largest exporter of oil to the USA. (1)
Canada is an American, Western country. Not sure why they would fall under my reasoning, which was specifically about non-Western countries. The USA is the one usually leading this oil-hungry warring - it’s even a meme at this point.
Brazil has various issues, most stemming from external influences corrupting the local political powers. Oil is just one of them, they are also coerced to deforest their country for European exports. (2)
(1) https://www.bloomberg.com/news/articles/2021-03-24/russia-oi...
(2) https://e360.yale.edu/digest/major-portion-of-brazils-export...
It’s almost as if you’re being intentionally obtuse. The established term (that I used) is “modern” colonialism - it doesn’t necessarily involve physical colonization, rather systematic external control.
Russia has been tussling with the West for a prolonged period now. Regardless, they are the second largest exporter of oil to the USA. (1)
Canada is an American, Western country. Not sure why they would fall under my reasoning, which was specifically about non-Western countries. The USA is the one usually leading this oil-hungry warring - it’s even a meme at this point.
Brazil has various issues, most stemming from external influences corrupting the local political powers. Oil is just one of them, they are also coerced to deforest their country for European exports. (2)
(1) https://www.bloomberg.com/news/articles/2021-03-24/russia-oi...
(2) https://e360.yale.edu/digest/major-portion-of-brazils-export...
>It’s almost as if you’re being intentionally obtuse. The established term (that I used) is “modern” colonialism - it doesn’t necessarily involve physical colonization, rather systematic external control.
I'll ignore the part where you started off by attacking me and point out: I obviously wasn't saying any of the countries you outlined were LITERALLY colonies, so don't imply I did. Thanks.
>Russia has been tussling with the West for a prolonged period now. Regardless, they are the second largest exporter of oil to the USA. (1)
Right... their entire economy is based on "extractive economies".
>Canada is an American, Western country. Not sure why they would fall under my reasoning, which was specifically about non-Western countries. The USA is the one usually leading this oil-hungry warring - it’s even a meme at this point.
Again, their economy is based on "extractive economies" - Canada is entirely beholden to exporting natural resources to western nations, and they are one of the so-called "western" countries you claim this doesn't happen to.
>Brazil has various issues, most stemming from external influences corrupting the local political powers. Oil is just one of them, they are also coerced to deforest their country for European exports. (2)
So.... a western nation subjected to systematic extraction?
I'll ignore the part where you started off by attacking me and point out: I obviously wasn't saying any of the countries you outlined were LITERALLY colonies, so don't imply I did. Thanks.
>Russia has been tussling with the West for a prolonged period now. Regardless, they are the second largest exporter of oil to the USA. (1)
Right... their entire economy is based on "extractive economies".
>Canada is an American, Western country. Not sure why they would fall under my reasoning, which was specifically about non-Western countries. The USA is the one usually leading this oil-hungry warring - it’s even a meme at this point.
Again, their economy is based on "extractive economies" - Canada is entirely beholden to exporting natural resources to western nations, and they are one of the so-called "western" countries you claim this doesn't happen to.
>Brazil has various issues, most stemming from external influences corrupting the local political powers. Oil is just one of them, they are also coerced to deforest their country for European exports. (2)
So.... a western nation subjected to systematic extraction?
Compare and contrast US/Brit actions when:
a) Norway nationalizes their oil
b)Iran nationalizes their oil.
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 same fate which is really cool.
Certainly over-throwing the Iranian government was terrible. But the key point is that the core economic problem of a resource sector 'crowding out' productive investment is a completely separate issue that occurs frequently in western countries that feature near zero political interference.
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 same fate which is really cool.
Certainly over-throwing the Iranian government was terrible. But the key point is that the core economic problem of a resource sector 'crowding out' productive investment is a completely separate issue that occurs frequently in western countries that feature near zero political interference.
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.
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.
Saudi Arabia also nationalized its oil with only positive consequences. How you do it is important. Seizure within weeks vs acquisition over years.
Exactly !
The obvious difference is that Norway fairly compensated the very few assets on the ground owned by foreign parties at the time.
Whereas Iran had massive assets on the ground mostly owned by foreign parties, that were ‘compensated’ at fire sale prices?
Why were foreign assets on-ground in the first place? When is the last time you heard of a Western country having foreign assets extracting value/resources from within their borders?
France state companies suck their Belgian subsidiaries dry. Energy, banks are the two big ones.
They tried the same with KLM, the Dutch airline, with less success.
You are quite right.
However, we cannot also completely deny that they have had some foresight/smarts (and a large dose of luck) in managing their Oil boom.
However, we cannot also completely deny that they have had some foresight/smarts (and a large dose of luck) in managing their Oil boom.