A credible line of thinking among economists who are not enamored of their political reputations holds that governments bent on producing surpluses, come what may, are misguided, even morally bankrupt.
The argument goes something like this: Publicly elected officials and their bureaucratic minions produce nothing fungible; therefore, they should produce no returns. Rather, their function is to collect taxes responsibly and distribute the funds for the general good – to the rich, the poor and the rest of us.
The general good comprises the schools we attend, the clinics we need, the roads we use, the parks we frequent, and the safe streets and gathering places we expect as dues-paying members of just and enlightened societies.
In other words, there should plenty of work to occupy the minds of those we pay through the ballot box and those who serve the periodic democratic lotteries we call general elections. And, in this line of argument, ideally there should be nothing left in the kitty at the end of the political day. All money is absorbed, all money is spent. No deficit, no debt and, crucially, no surplus.
Except, of course, the system doesn’t work this way, anywhere.
But what if it did? Sort of.
A reader writes, “I have been to Norway several times. By the way, Norway has some of the highest retail gas prices going and don’t even think about buying booze over there. Hard stuff was $50 per 750 ml 15 years ago and God help you if you did not bring in your duty-free limited when visiting.”
Still, as this reader points out, that Nordic country of just over five million souls has just now demonstrated (on paper, at least) that, thanks to its public sector’s perspicacity, attention and drive, each of its citizens is a millionaire, and will likely remain in that vaunted economic status for some time, as New Brunswick’s and Greece’s economies meet on the slide to perdition.
That doesn’t mean Norwegians get to cash in, individually; it means that Norwegians, collectively, get to enjoy one of the highest standards of living in the world, the chance that their children will be among the most highly educated in the world, the certainty that their health care will cost less for the benefits they receive than almost any other place in the world and that old-age peace of mind is actually, well, fungible.
Here’s what the U.K.’s Daily Mail online edition had to say about the development in early January:
“Norway’s sovereign wealth fund has ballooned so much due to high oil and gas prices that every person in the country became a theoretical millionaire this week. The nation is proving to be an exception as others struggle under a mountain of debts. Set up in 1990, the fund owns around one per cent of the world’s stocks, as well as bonds and real estate from London to Boston. The surplus revenue is collected in the Government Pension Fund Global.”
Said Finance Minister Siv Jensen in an email to reporters: “Many countries have found that temporary large revenues from natural resource exploitation produce relatively short-lived booms that are followed by difficult adjustments.” Added Oeystein Doerum, chief economist at DNB Markets: “The fund is a success in the sense that parliament has managed to put aside money for the future. There are many examples of countries that have not managed that.”
Indeed, there are.
Canada’s legislators drone on endlessly about this nation’s enormous natural resource potential. New Brunswick Premier David Alward almost begs citizens of this province to embrace the opportunities (as yet, unrealized) in shale gas development.
But what, exactly, is he and his confreres elsewhere in this country doing about securing the long-term efficacy such massive developments might contribute to social development: education, skills training, economic diversification, even (and most paradoxically) strategies to employ the windfalls from oil and gas to wean us off oil and gas with brave, interesting, new, renewable energy technologies?
So far, the genius of our political leaders seems confined to balancing the books, perhaps achieving small surpluses at some indeterminate point in the extenuated future.
The risk of bankruptcy in this endeavor is not merely fiscal; it’s moral.