How to beat the resource curse in Norway (Summer School)

**SPEAKER_1** (0:01)
This is Planet Money, from NPR.

**Robert Smith** (0:15)
Welcome back, everybody, to Planet Money Summer School World Tour, the only international economics degree you can get while driving on the wrong side of the road. Or is it the right side?
I'm Robert Smith. Every Wednesday until Labor Day, we are living out of a suitcase and jetting to the seven continents of this earth. In each country, we'll hear stories of how other people have tackled some of the same economic problems we face here at home, and we'll collect solutions that we might not have considered. It's like a cheap souvenir that can improve everyone's life instead of just gathering dust on your bookshelf. Today, we visit Europe and tour one of the countries that is actually richer per person than the United States of America.
Norway has won the economic lottery, and it's managed those riches better than just about any country on earth. Every class at summer school has a local expert to guide us around. And today in Norway, we have Hilde Bjornland, a professor of economics at the Norwegian Business School. Hey, professor.

**Hilde Bjornland** (1:21)
Hi, Robert. You can call me Hilde.

**Robert Smith** (1:23)
Okay, Hilde. So Norway and really all of Scandinavia, when you think about it, are often held up as this model of how a wealthy society can create this wonderful quality of life. I know it looks idyllic from the outside, but there must be some challenges in your economy that we don't normally talk about.

**Hilde Bjornland** (1:45)
There's a lot for us to learn from other countries. So one thing is that there's a lot to strive for in terms of, if I should be a little bit more critical in the terms of entrepreneurship, productivity, and these days, technology and AI, we are not the leaders there. So in that sense, we are safe and sound with a lot of richness and social welfare, but maybe we are not the leaders in inventing things at the moment.

**Robert Smith** (2:14)
Well, it is notable that Norway is only one of a handful of countries in the entire world that has a wealth tax. Most countries tax income, but Norway actually taxes your investments and your houses and your assets that you own every single year.
Does this maybe slow down the competitive spirit to start an internet or an AI company?

**Hilde Bjornland** (2:37)
I think it's part of the problem. And I think for sure most economies in Norway think it is preventing the kind of investment we would like to have. So it has been suggested to reduce it, and it's being discussed at the moment. But for now, it's clearly not working in the favor of new investment.

**Robert Smith** (2:56)
Well, I could tell you, as a country that has both new investment and a brand new trillionaire, there is more discussion here about perhaps having a wealth tax.

**Hilde Bjornland** (3:05)
Yeah. So there's other taxes you can also impose, like inheritance tax and house tax separately, and you can also do higher income tax. But we have had most of them, so that makes for a less incentive, it said.

**Robert Smith** (3:18)
There is also, as we will see today in one of our case studies, the subject of the oil. Norway is one of the top oil producers in the world, the biggest in Europe, and that's led to these riches that I mentioned at the beginning of the show. So the money has been amazing for Norway, but is it possible to be too rich, to have too much money?

**Hilde Bjornland** (3:40)
I'm not sure whether we have too much, but if you have a lot, the politician might not necessarily prioritize the right thing. There will be a lot of pressure on them to spend it on a lot of things. You build roads to small islands without thinking on that you have to maintenance all those roads in the future, which might not necessarily make the Norwegian economy more productive and more sustainable in the future.

**Robert Smith** (4:08)
So how does a country stay productive and sustainable after the discovery of oil and massive riches that pour into the economy? We will tackle that question with Hilda and tell you a parable about the economic value of restraint. When it comes to governments, or frankly, their own lives, the key to long-term wealth is to resist the short-term urges.
After the break.

**SPEAKER_4** (4:40)
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