Statement, Comment | Norway has a lot of money we can not spend. Now it must be saved
Comment This is a comment, written by an editorial staff member. The commentary expresses the writer’s attitudes.
It is not easy to be Prime Minister Jonas Gahr Støre (AP) and Minister of Finance Trygve Slagsvold Vedum (SP) these days. They have promised a lot, but have been overtaken by circumstances for which strength can not be blamed. The private economy will be tighter, while the state will be richer. This easily leads to great dissatisfaction. Jonas has now gathered the troops for a budget conference at Klækken Hotell. It happens while the price of petrol and the price of electricity are constantly reaching new heights. Food and many other products are becoming more expensive and the rent level is rising. The demand from voters that the state must ease the burden is becoming stronger. And to make the picture even gloomier, a war is going on in Europe that will lead to Norway spending even more money on the Armed Forces.
We have to get used to the fact that our money is more unprofitable and we have to get used to the idea that the government must prioritize defense over many other things. It is difficult for a population where the vast majority have not had a single financial concern for 30 years. At the same time, Norway must receive many refugees and an increasingly older population will demand more from the municipalities. On top of it all, the government has big climate ambitions – ambitions that will cost. Probably no government has had major challenges in recent times, despite a giant oil fund. In theory, they can spend a lot, but if all Norwegians got one million kroner each in an account, the economy would collapse. Many would act like crazy and prices would rise. Inflation would explode and prices would skyrocket. It would be a huge party that ended in a solid blue Monday.
When Jonas became Prime Minister, we were on our way out of a pandemic. The world looked pretty bright. We had done well through years of state of emergency. The crisis packages meant that a lot of money was pumped into society. As a result, the economy was strongly stimulated. When Jonas became prime minister, unemployment was on the way to a bottom level and there was new optimism. Then the price of electricity began to rise. Thus, it becomes more expensive to produce and as a result of increased prices for food and other goods. This will lead to demands for large wage increases, which in turn can lead to inflation. Then Putin began to rattle with the sabers and ended with war. This has led to increased hoarding of fuel and thus the price goes up.
Imagine how wonderful it would be for Jonas and Trygve if they had been prime minister and finance minister in a country with bad advice. Then the people had accepted that now the belt must be tightened. Norway, on the other hand, is rich in sugar. That is why we must save. We have become demanding and the expression “we live in the richest country in the world after all and therefore we must be able to …..” has been repeated time and time again. And politicians have not dared to resist.
Before Trygve became Minister of Finance – the time when he was a superpopulist and laughed his way through one debate after another, he called the then Minister of Finance Siv Jensen (FrP) the tax queen. He promised voters that he would not sit in a government where the pump price of diesel was 20 kroner a liter. Now the experts warn against the price during the summer can be twice as high, ie 40 kroner per liter. This is independently a cat pain for Trygve – he as leader and party that is strongest in the parts of the car where the country is the only means of transportation. Trygve has been challenged on this gang lately. The answer is rather vague. So far says that the situation is uncertain and that we will have to wait and see. His voters are unlikely to settle down for very long.
If Jonas and Trygve push too much money into society, prices will rise and this in turn will lead to interest rates rising. It will throw many with a lot of debt into a difficult situation. We can get higher inflation which means that our money becomes less valuable and people will demand more in wages. This raises the price level and it will, for example, be more difficult for the Norwegian export industry to sell its goods. It’s pretty simple stuff. On top of that, many industries are struggling to get applicants. There is very low unemployment.
Politically, however, it can be expensive. Voters will demand that the government do something about petrol prices and that they must continue the electricity subsidy. I think the rest of us should be happy that we are not making a state budget for 2023. Such a world is now nothing to envy anyone.