We read here how Norway’s oil rents have been more wisely invested than the UK’s. Fair point, but it still implies that we have failed to learn from the GFC:
Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country’s G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies.
As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise.
Why are rising property prices seen as a good thing? They are only good for speculators and bankers.
Everything is relative.
As we have commented on here, if oil rents are shared as citizen’s dividends, this is ok in the short term. In the long run, economic laws dictate that greater purchasing powers will only cascade into higher land prices if land rents are not collected. It is not rocket science, but one would think that a rational society would be going to any length to avoid similar GFC tragedies. Norway’s smug leaders must believe that land booms are fine for their generation. Little East Timor has outperformed them via their oil wealth investment strategy.
With corporate tax revenue plummeting and corporate suicides building by the day, we must avoid similar boom-bust economic cycles. Instead we see government’s globally engaging in massive infrastructure projects that will only make land in prime locations…more valuable.
This mentality is a neo-colonial hangover (MP3) where the economic profession outrightly supports those who own 80% of the planet to receive implicit subsidies through any improvement society makes.
We can only truly benefit from oil rents when land rents are also collected for the public good. The genuine resource curse is that we look at this problem with blinkers on. We must ensure all scarcity rents from natural resources and natural monopolies are recycled so that young drug takers realise there are creative, well paid jobs on offer. Who needs a gun when you have the best job you could imagine? Current policy making is selling future generations short and doing little to provide the vision that we are indeed rational.