The Easter Bunny and Norway’s Dangerous Oil Myth

‘Mister Paul, Sir, what is the Easter Bunny?’ asked Anil, the 19-year-old class joker. Before I could respond He followed up with ‘Is it your god?’

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The class, made up of about 15 young Indians erupted into laughter. They had only just got their head around the apparently hilarious idea of the Christmas tree. This was too much. So, your son of God, is crucified, rises from the dead, ascends into your heaven and you celebrate by eating chocolate rabbits.

I have now lost track of the number of occasions when around Easter someone will outwardly ponder the origin of the Easter Bunny over the dinner table. The explanations will usually range from it being originally Pagan, at which point someone – probably me – will make sure the conversation takes a tangent along Jehovas Witnesses (for them everything is pagan, and therefore not to be celebrated), or some long recycled critique that Easter is over-commercialised these days.

The Easter Bunny under this analysis was invented as a clever marketing trick to sell more chocolate. What consensus is reached on the origins of the practice usually depends on which speculation-peddling website the smartphone user at the table happens to click on first.

What can be assumed is that everyone present will agree that the Easter Bunnies and Easter Eggs they may or may not lay is a somewhat absurd way to celebrate Jesus rising from the dead.

But this is a rather harmless, if repetitive little conversation that crops up once a year. In Norway, there is another layman conversation piece that is equally repetitive but a lot more corrosive. Namely, that Norway is lucky, lucky to get oil.

4733717-big-waves-hitting-oil-platform-in-the-north-sea

Once they hit the black stuff back in around the 1970’s all this was inevitable. It is less of a conversation, more of a bullet proof riposte to the timeless queries one faces from bemused visitors about the high wages, free education, good hospitals, generous welfare state, and the existence of foreigners working in Oslo.

Norway is rich because of the oil. It comes as second nature from the mouths of resident foreigners and Norwegians alike, almost apologetically from the latter. The problem with this simple and intuitive reasoning is that it is at best misleading and more importantly denies discussion of the real question, how did Norway manage to make its oil work for everyone?

First it’s necessary to briefly take down the inevitability myth. Once you hit oil (or any other valuable resource), inevitably your country will become filthy rich living happily ever after, at least until the Russians come for you. Well no, actually quite the opposite, discovering natural resources is so synonymous with underdevelopment that there is a large and expanding academic research dedicated to trying to explain what they call “The Resource Curse”, from Nigeria to Saudi Arabia, Sierra Leon, from South Africa to the UK.

Natural resources are correlated with rent seeking, corruption and frequently war. Certainly there is absolutely nothing in history to suggest that natural resources will necessarily be used for the common good of the country. And nothing to suggest that the resources will remain under the stewardship of the state for who the benefits will be relatively evenly shared among the general population, while much of the profits are sensibly stored away in national pension.

No that is pretty unique.

I first came to Norway two years ago and I worked as a dishwasher in a bar. When I told people in the UK my wage was 16 pounds an hour they were always shocked. Upon consideration they reached the conclusion, ah it must be the oil money.

But there is nothing in finding oil that implies that dishwashers should be paid a living wage. Indeed, there is no minimum wage in Norway, yet unskilled labour pays living wages. This is almost certainly because the relatively generous welfare the unemployed receive requires that employers pay enough to make the switch from sloth worthwhile.

The upshot is that Norway has followed the old economic idea that the UK and other liberal countries have neglected; money in the hands of the bottom third income group is very healthy for a national economy.

They are more likely to spend it faster; they are more likely to spend it domestically. Moreover keeping the bottom third sufficiently in touch with the middle class spending habits and lifestyle increases social cohesion and reduces social problems.

This correlation is barely disputable since the exhaustive aggregation of studies in “The Spirit Level” demonstrated it across countries, counties and towns:  A more equal distribution in income has a stastically significant relationship with everything from happiness to lower teenage pregnancy and drug use.

In short, higher than average taxes to pay for the transfer of wealth to the poorest pays for itself. Benefiting the poor but also  the rich, who unlike  in many wealthy countries, are able  to walk the streets relative safely (see LA for the inverse).

Norway’s success in achieving this is hidden by the oil myth, but a cursory inspection of Norway’s Scandinavia neighbours, less endowed with oil but equally egalitarian (more or less) have achieved some of the best living standards in the world following the same strategy.

But, isn’t this bad for innovation? Not necessarily. While the proponents of neo-liberalism, the dominant economic model in the West, would argue that high taxes disincentivise risk taking and entrepreneurship, this is far from undisputed.

Will a prospective entrepreneur balk at the prospect of starting a business because the marginal tax rate is 40-50% and choose instead to sit on NAV, cursing their bad luck for living in this socialist hell? Or would a prospective entrepreneur  knowing that their state will never let them go homeless and that their kids will always have access to higher education, more gladly risk their house in Norway than elsewhere.  I would guess the latter, but my point is it is not so straightforward.

Certainly, Sweden have high taxes and no shortage of global competitive businesses. Meanwhile, Norway have some of the highest skilled and efficient labour force in the world, precisely because companies need them to be in order to  remain globally competitive

THE Easter Bunny conversation pops up once a year, the oil luck myth is continuously reproduced all year round and frequently left unchallenged. In one sense that is a good thing. Perhaps Norwegians would become unbearably smug if they knew how anomalous their country’s recent economic history was.

But that potential problem now pales in comparison to the more ominous danger looming large in the opinion polls. Norway appears on the verge of electing into office two parties whose current dedication to reducing government spending and promoting privatisation belies a complete lack of understanding of how Norway achieved its envious and unique position on top of both the tables of GDP per capita and social equality.

Privatising saves money through cutting wages and worker benefits. It will artificially save money in the short run (although even this is questionable), but simultaneously cut away the long term roots of the Norwegian economic miracle. Troublingly, it is very difficult to reverse.

So next time you hear your neighbour, colleague, friend or enemy throw away the line about Norway’s oil luck, make sure you clarify them: it’s not what you have, but what you do with with it that counts.

As for the Easter Bunny, let it keep its mystery, if not its dignity.

I originally wrote a shorter version of this article for The Foreigner. An online newspaper covering Norwegian news in English.

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About Paul Beaumont

I am a part-time academic writing teacher, occasional journalist and full time IR masters student. Available for hire - but never in the morning. My CV is available here: http://www.linkedin.com/in/pauldavidbeaumont
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4 Responses to The Easter Bunny and Norway’s Dangerous Oil Myth

  1. Mathias says:

    Hi Paul, good article! You make some good points.
    As a fellow UMB student I have enjoyed your articles in Tuntreet.
    I do disagree with you on your opinion of the that we have an omnious danger looming because of the possibility of electing the two other parties in question. You make it sound like they are for privatizing everything, which is not true. Unlike the sitting parties they do not have a principally hostile approach towards privatizing, and they will most likely make a reflected descission of what is the best solution in each case. The sitting parties have not performed well these last years, and I personally have lost all faith in many of the people in charge.

    • For some reason it occurred to me just now when I was discussing the “Swedish model” with someone that I forgot to reply to this.

      I guess we will shortly be finding out whether the Hoyre will make reflected decisions or not. You are probably right about me exaggerating the dangers: I am perhaps letting my British experience with privatization and what “reflective privatisation” looks like practice, namely token discussion followed by ideologically faith based privatisation of everything. Once in government the UK Conseratives have gone way beyond anything they claimed in the election campaign.However, they have a recession to “justify” it, Norway doesn’t, so hopefully that will inhibit their ability to pursue drastic reforms. Moreover, another caveat – my understanding of Hoyre and Fremgangs’ local council politics comes via my SV friends, which is obviously at least a little biased :). Ultimately, I guess I live in a bit of a metropolitan bubble which my shallow, almost utopian understanding of Norwegian politics reinforces.

      That all said, I still really fear a FrP Hoyre majority :)

  2. Braincage says:

    Very good, with one exception:

    “Perhaps Norwegians would become unbearably smug if they knew how anomalous their country’s recent economic history was.”

    Have you honestly ever met a Norwegian who isn’t unbearably smug?

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