Norway and Sweden

Norwegian spring - circa 2005

If not for the telltale Norwegian flag, this picture from a half forgotten spring day could just as easily have been from neighboring Sweden.

The “brother kingdoms” of Norway and Sweden should be of interest to all of the world, for the way they illustrate what really matters in a highly developed country.

The two nations share the Scandinavian peninsula, my native Norway to the west and Sweden to the east. Most Norwegians are genetically indistinguishable from Swedes (and Danes), the culture is very similar, and even the languages are mutually comprehensible. Well, older Swedes may have a hard time understanding Norwegian unless they are paid for it, but the reason for this is psychological. For centuries, Sweden was the big brother, not just in population but in prosperity and culture as well. From 1814 to 1905 Norway was basically as Swedish province, but gained independence peacefully after a dramatic cultural revival in the latter half of the 19th century, led by world-famous names such as Ibsen (playwright), Grieg (composer), Munch (painter) and Vigeland (sculptor). This golden age turned out to be temporary, and Sweden remained the leader of the Nordic countries.

Then in the 1960es, Norway won the nature lottery: Under the North Sea lay enormous reserves of oil and gas. Over the next decades, great wealth started flowing into the country: Mostly directly to the state through oil taxes and ownership, but the high-tech oil supply industry also earned large amounts of money. By now, a Norwegian worker is likely to earn substantially more than his or her Swedish counterpart, and pay less tax. For some years now, the UN has declared Norway the world’s best country in which to live. Some envy from the Swedish side cannot be avoided, but there is actually less reason for it than one might think.

It is true that a Norwegian worker (or pensioner) has quite a bit more money left after tax. But it just so happens that most things are more expensive in Norway too. Food is so expensive that Norwegians who live near the border often drive to Sweden to buy their groceries for the week, and even on the south coast people take the ferry to Denmark – a rather long trip for something called a ferry – to buy meat and alcohol. Alcohol is expensive in both Norway and Sweden, but even more extreme in Norway. But it is not just food. Books are substantially more expensive in Norway, cars are a lot more pricey, and housing is disturbingly overpriced. (In Oslo prices are comparable to the world’s largest trade centers such as London, New York and Tokyo, with 10-20 times the population density.)

The surprising result is that the living standard in Norway in Norway is only marginally higher in Norway than in Sweden. Indeed, for a large family the costs of housing and food in Norway may make it harder to make ends meet than in Sweden. (That said, large families are rare in either country these days.)

It seems that while money has poured into the Norwegian economy, there has not been a corresponding increase in the things you can buy for money, and so the prices have risen to meet the newfound willingness to pay.

There are some exceptions to this. One is goods that are anyway directly imported from overseas, such as electronics and everyday clothing. Scandinavians also increasingly import music, video and English-language books from abroad, in which case the nominal wealth of Norwegians translate directly into purchasing power. And with both nations having legally enforced 5 weeks vacation, it is also customary to visit foreign countries each year, where the strong Norwegian currency makes the winter-pale Norwegians into princes and princesses.

But for most of the year, the difference in nominal income makes very little difference to the actual standard of living. There is a lesson to learn from this, I think. It is true that for a developing country, lack of money is a big problem. But for the world’s richest countries, GDP growth is no longer really important. Streamlining public services and reaching compromises on political issues contributes more to the wellbeing of the people. A number of countries should pay heed to this and perhaps take a long good look at Sweden now that their own economies are faltering. Perhaps they can get some hints there.

Leave a Reply

Your email address will not be published.