This is not primarily about petrol taxes, Swedish food prices, or Jens Stoltenberg’s irritation during Question Time in the Storting. It is about something far more serious: that the state has made itself the dominant actor in the Norwegian economy, and that the bill is being passed on to households, businesses, and future generations.
When Stoltenberg replies that Norwegians have greater purchasing power than Swedes, that is, formally speaking, an economic point. But it is also a political smokescreen. For the question is not whether Norway still appears richer than Sweden on paper. The question is why a country with a sovereign wealth fund, enormous tax revenues, and a state that pulls in hundreds of billions must nevertheless explain to ordinary people that they are expected to tolerate higher interest rates, higher taxes, higher electricity bills, higher food prices, and higher housing costs. This is where the Finance Minister’s language fails. He compares end results while concealing the causes.
For the temperature in the Norwegian economy does not primarily come from overzealous small businesses, imprudent families, or a private sector that has lived beyond its means. It comes from the state. The Norwegian state has assumed so many permanent obligations, so many transfers, so many subsidised schemes, so many bureaucratic layers, and such vast public ambitions that the economy no longer breathes normally. The state spends money, the state hires, the state regulates, the state subsidises, the state compensates, the state redistributes – and when prices rise, it pretends that inflation is a meteorological phenomenon, something that simply drifts in over the country.
But inflation is not merely a figure in a report from Statistics Norway (SSB). It is a signal. It tells us that demand is being pushed upwards without a corresponding increase in productivity. It tells us that more money is chasing the same goods, the same services, the same homes, the same tradesmen, the same imported input factors. When ever more people live from transfers while ever fewer bear the costs through productive labour, an imbalance arises that no rhetoric can conceal. The person who lives from the state shops in the same market as the person who lives from his own wages. Both buy food, clothing, transport, electricity, and housing. The difference is that one group’s purchasing power is politically allocated, while the other group’s purchasing power is economically earned.
Here lies one of the great unspoken truths. Norway has imported both people, obligations, and costs on a scale that the state has long described as “investment”, “inclusion”, and “community”. But the economy does not use such words. It measures realities. When the state finances housing, benefits, and services for tens of thousands who have not contributed correspondingly to value creation, pressure increases in the housing market, the rental market, and the welfare state. Rental prices weigh heavily in the consumer price index. When rents rise, the CPI rises. When the CPI rises, pressure on Norges Bank increases. When interest rates rise, the cost of capital rises. When the cost of capital rises, rents also rise. Thus a circle is established in which the state first creates part of the pressure and then leaves it to the central bank to punish the private sector for the consequences.
This is the Norwegian variant of economic self-deception. The state can increase its budget next year. The household cannot simply increase its income. The state can compensate its own sectors. The business must face the market. The state can call taxes necessary climate measures, solidarity, or responsibility. The private employer must explain to the customer why the price became higher. The state can shift costs between chapters, funds, and budgets. The family faces the mortgage instalment.
Stoltenberg knows this. That is why he must speak about average purchasing power, not marginal pain. He must speak about Norway as a whole, not about the individual household. He must speak about a “strong economy”, not about a private sector slowly drained of its capacity to act. He must speak about low unemployment, not about low productivity growth. He must speak about Sweden not being a better country to live in, not about why Sweden can lower taxes while Norway lectures its own citizens about responsibility.
This is where Ludwig von Mises would have recognised the problem immediately. The economy cannot be commanded without consequences. When the state attempts to replace the market’s signals with political priorities, the result is not prosperity but distortion. Capital does not flow where it yields the highest return, but where the state points. Labour is not necessarily tied to productive activity, but to administration, compliance, reporting, applications, grants, and control. Afterwards, one stands there wondering why productivity is falling.
Norway has additionally tied itself to an energy policy and a tax level that weaken competitiveness from within. High energy costs directly affect production, transport, and household finances. A weak krone makes imported goods more expensive. Imported inflation is thereby amplified by domestic weaknesses. When the mainland economy does not produce sufficient real value creation to sustain the state’s ambitions, it helps little to point to the sovereign wealth fund as a national jewel. A fund is not a productive culture. It is accumulated capital. It can be used wisely, or it can be used to buy freedom from necessary reforms.
The latter is what Norway is now doing. We are kicking the can down the road, but the can has grown heavier with every kick. Pension obligations, healthcare expenditure, welfare expenditure, integration costs, energy transition, bureaucracy, and public-sector wage growth are accumulating like a structural mountain. No Finance Minister wishes to say this aloud, because the one who says it aloud must also explain who is to receive less. Therefore, one chooses the white lies: “We can afford it.” “We have a strong economy.” “We have high purchasing power.” “We simply have to get through a demanding period.”
But this is not a demanding period. It is a demanding model.
Listhaug is correct when she points to Sweden and the taxes. But neither does she fully reach the core. For the problem is not merely that taxes are too high. The problem is that the state has made itself dependent upon them. The Norwegian state cannot simply reduce the pressure on the population, because it has simultaneously made itself larger than the economy can bear. It must collect more because it promises more. It must regulate more because it has created more problems. It must compensate more because its own policies make life more expensive. Thus the state becomes both arsonist and fire brigade.
This is what Stoltenberg’s foggy language is meant to conceal. He wants us to look at the national accounts and feel rich. But people do not live in the national accounts. They live in the monthly budget. They do not encounter “higher living standards” as an abstract quantity. They encounter higher food prices, more expensive loans, more expensive electricity, more expensive insurance, more expensive municipal fees, and a tax burden that turns wage settlements into an illusion. First one receives 4.4 per cent. Then the state and the interest rate take it back.
Norway is not poor. That makes the matter worse, not better. For a poor country can at least explain to its citizens that scarcity is real. A rich country that makes its citizens poorer must resort to morality, statistics, and lecturing. That is why Stoltenberg becomes irritated. Not because the question is foolish, but because it strikes a sensitive point: Why does the richest state in the world feel like an ever more expensive burden for those who finance it?
The answer is uncomfortably simple: the state pulls ahead; the population falls behind. And so long as politicians call this responsibility, the spiral will continue downwards with a smile, a budget settlement, and a new explanation that, after all, we still have it better than in Chad.