Monday, April 18, 2005

We're Rich, You're Not. End of Story.

No amount of evidence can shake Norway's idea that it is the world's wealthiest country. In Oslo, library collections are woefully outdated, and public swimming pools are in desperate need of maintenance. News reports describe serious shortages of police officers and school supplies. When my mother-in-law went to an emergency room recently, the hospital was out of cough medicine. Drug addicts crowd downtown Oslo streets, but applicants for methadone programs are put on a months-long waiting list. In Norway, the standard line is that there must be some mistake, that such things simply should not happen in "the world's richest country." Why do Norwegians have such a wealthy self-image? Partly because, compared with their grandparents (who lived before the discovery of North Sea oil), they are rich. If the E.U. was treated as a single American state, it would rank fifth from the bottom. In short, while Scandinavians are constantly told how much better they have it than Americans, Timbro's statistics suggest otherwise.


At April 18, 2005 7:34 PM, Anonymous Anonymous said...

48 bucks for a home-delivered pizza! Jeez! I hope it is at least a good one, not Domino's or Pizza Hut crap.

At April 18, 2005 8:57 PM, Anonymous Anonymous said...

Uh How stupid we were to give you that part of sea with many of your oilfields, you don´t know how to make the best of them :) But we did not know there was oil back then either.

Thomas Bolding Hansen

At April 19, 2005 1:07 AM, Blogger Mike said...

48 bucks for a home-delivered pizza! Jeez! I hope it is at least a good one, not Domino's or Pizza Hut crap.

Yup! Believe it! My wife & I have spent $40-50 (usually closer to $50) for pizza & cokes on several occasions at at Dolly Dimples & Peppes in several Norwegian cities, and that was when the exchange rates were around NOK 7-8 = 1 USD. Right now they're at NOK 6.3 = 1 USD. Ugh.

And at Dominos you can get 2 pizzas & cokes delivered for around $20 + tip!

But the pizzas from Dolly Dimples & Peppes definitely are better overall than the Dominos or Pizza Hut stuff; they also have some different ideas and themes as to what pizza should be. If you're in Norway, don't avoid their pizza joints because you think it might not be Norwegian.

Eating out generally is more expensive in Norway. Besides pizza, our dinner-for-two expenses in Oslo have ranged from $60 (Brasserie 45) to $120 (Harry's). These prices are with cokes & usually coffee & deserts, never alcohol (Norwegian alcohol prices are guaranteed to set Americans up for bankruptcy court).

Our Norwegian friends repeatedly commented about how much Norwegians entertain at home due to the high cost of going out; he even rolls his own cigarettes to avoid the high cost ($6-7/pack). They live very modestly from day to day but do seem able to find the resources to pay for two cars (also not a cheap item in Norway) and vacations -- to both the U.S. & Australia in one year. So there are tradeoffs & priorities at the personal level. And they own both their home & their hut.

Yes, they're sick of Norwegian taxes (up to 70% personal, 23% sales/VAT) & tolls. Norwegian income tax filings are public record and are available on the internet: If you know any Norwegians & how they live & look them up in the income tax database, you will be surprised at how little they live on compared to Americans.

The UiO students we've known feel really hard-pressed to pay for their necessities from day to day (they especially seem to appreciate presents of liquor from the U.S., wonder why ...). Yet at the same time they get a tuition-free education and Oslo's public transit system is a real bargain if you buy the passes.

Norwegians also have an extremely high rates of 2nd home-ownership. Hytte in the countryside are a Norwegian tradition going back many, many years. In fact, that's why some German retaliations in WWII had little impact -- word would leak out ahead of time and nobody would be home. When you're driving down the highway & notice a break in the guardrail, there's a good chance that someone's family hut is halfway up (or down) the hillside.

Individual Norwegians may not have the same disposible income that an individual American has, and to that extent they are personally poorer. But anyone who saw Norway in 1960 (I did) and can compare it with the Norway of today definitely will get the feeling that it is a far richer country. "We don't drive VW's anymore" (referring to the bugs, not to today's models) is an expression I've heard from a number of Norwegians. Half lots in our old neighborhood (where my 1 ør & 5 øre coins actually had value and homes were once rented to American NCO families with very limited incomes) were going for the equivalent of $225,000 (USD) about three years ago.

Although I'm sure Norwegians on average would be better off if they'd get rid of socialism, Norway really needs it's own study to measure socialism's costs. The real test will come when the oil money runs out.

At April 19, 2005 6:00 AM, Blogger Mike said...

Thinking about this some more, the price of pizza as it appears to an American in Norway is really irrelevant; what matters is how it appears to a Norwegian, and whether or not the Norwegian considers it excessive.

Take your average American assembly worker. In todays job market $8/hr. for entry-level unskilled labor is fairly typical. So that $22 spent at Dominos for pizza & cokes for 2 plus a $2 tip takes 2.75 hours to earn.

Norway has no minimum wage laws but minimums are generally negotiated industry wide through collective bargaining. The minimum for unskilled engineering labor (which I'm imputing to be equivalent to assembly work) as of 2002 was NOK 88.60, or USD 14.06. It would take the unskilled worker at the minimum negotiated wage level 3.4 hours to earn the pizza. That's only 24% more time than the American, and that's assuming typical entry-level wages in the U.S. vs. the minimum negotiated wage in Norway; many entry level Norwegian workers quite possibly would earn more, thereby lessening the difference.

Whatever the real number, 24% is a lot less than the 100-150% difference that one might assume based on exchange rates.

As for whether or nor Norwegians are satified with what they have to pay for pizza, you'll have to ask one.

I guess when we're paying the tab at a Dolly Dimples this coming summer, we'll have to remind ourselves that it wouldn't hurt so much if we were Norwegian.

At April 19, 2005 2:37 PM, Blogger Unknown said...

Thanks for those comments, Mike V. Norway is indeed extremely expensive. I've seen several rankings with Oslo as the number two most expensive city on the planet, after Tokyo, but way ahead of New York City, London etc.

At April 19, 2005 2:37 PM, Anonymous Anonymous said...

I have to aggree to a certain extent with Mike V. Norway is not expensive to Norwegians. I don't even think the Pizza in your example is the 24% more expensive thet you claim. In the minimum negociated wage you mention is included many benefits that I believe is excluded in the states. This exclusion is often referred to as "freedom" as I understand. Freedom to take the money and buy the benefits you want/need. But for some weird reason you can make a living from selling McDonalds hamburgers in Oslo, but hardly in New York. Ponder that?


At April 19, 2005 2:42 PM, Blogger Unknown said...

"for some weird reason you can make a living from selling McDonalds hamburgers in Oslo, but hardly in New York."

Well, Socialism has had the effect that the difference in wages between educated people and low-skilled workers is less than in many other countries. It means that getting a University education in Norway probably doesn't pay off as much as it should. But it also means that you can get by even on fairly simple jobs.

At April 19, 2005 3:23 PM, Anonymous Anonymous said...

"it also means that you can get by even on fairly simple jobs."

You make this sound allmost like a bad thing!?!


At April 19, 2005 5:14 PM, Blogger Serf said...

Norway is scaringly expensive, especially alcohol and eating out. We were so shocked at the cost of two beers in an Oslo pub that we left after one drink to find a supermarket so we could drink in our hotel room.

We reckoned without Norway's licencing laws. After realising that Norway has worse laws on the sale of Alcohol that even the UK, we went back to the pub.


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