Norway in a political nutshell

Q: Can you give us one example on how Norwegian politics is different from many others?
A: One striking feature is how careful the politicians have dealt with the state’s enormous revenue from the Norwegian oil industry. In short, it’s been funneled into a fund that will benefit coming generations and politicians have agreed on a budgetary rule for how the capital gains shall be spent.

Q: How did this all start?
A: It started in 1969, when one of the world’s largest offshore oil fields was discovered off our coast. In 1990, the Norwegian parliament passed legislation to ensure that we use this revenue with great caution for our long term needs. What is now called the Government Pension Fund Global was set up for this purpose. Today, this fund has over US$1.3 trillion in assets, including 1.4% of global stocks and shares, making it the world's largest sovereign wealth fund.

^{Professor Jon H. Fiva}

Q: How much of the fund’s value can the politicians actually use?
A: They have agreed on a budgetary rule stating that a maximum of 3% of the fund's value should be allocated to the yearly government budget. It must be tempting to spend more, and it is almost incredible that they have managed to avoid that – they even lowered the spending limit from 4% to 3% in 2017. And this rule is broadly supported, from the left to the right side of the political flanks.

Q: Still, being a Norwegian politician today in this respect must be a bit like having a super rich, but quite strict, dad?
A: It is of course easier to reach agreements when you have a bigger cake to share, but on the other hand: Norway is a unitary country with three levels: National, regional and local governments. And the two latter ones mostly have to work with the resources they are given from the national level. They can’t simply refuel their economy with oil money, and have to prioritise pretty hard to make ends meet.

Q: In many countries, there are basically two main parties, one big one to the left, one big one to the right. How does this look in Norway?
A: Quite different. The two largest parties are the left-leaning Labour Party (Arbeiderpartiet) and the right-leaning Conservative party (Høyre), but there are seven additional parties represented in the national government (Stortinget).

Q: This sounds like a recipe for chaos, doesn’t it?
A: Not necessarily, even if the fragmentation indeed has its challenges. What is remarkable here, is that all the seven largest parties have had cabinet seats during the 2000s. That means that they have had to carry the responsibility of actually governing, not just opposing the power – and that has made for a more consensus-oriented political climate, with a tradition for broad cross-party agreements and coalitions. The fact that political elites within each party can discipline their rank-and-file members also contributes here.

Q: How?
A: In Norway voters’ decisions are based on evaluations of parties and those parties’ policy programs rather than on the individual candidates on the lists, unlike, say, in the United States – where political campaigns carry a person’s name and you primarily vote for that person.

Q: OK, so what does that do for us?
A: To put it bluntly: When considerable power is concentrated in the hands of the party leadership, parties become cohesive electoral teams who are able to credibly commit to their policy platforms.

Q: Norway is known for its egalitarian culture, with differences between the traditional classes being relatively small. How does this affect political life?
A: This has been a driving force for generations of politicians after WW2, and in general, this is true on many levels. One striking element in Norwegian politics is the strong will to redistribute financial resources from areas with more private wealth to more remote areas with less economic resources. If a remote area can’t fund high quality health and education services, politicians agree that everyone has the same right to that level of quality – no matter where you live or who you are. Still, the gap between the rich and the poor is growing.

Q: How do you know that?
A: We have data on this, of course, and this is an important research topic for me and my colleagues here at BI Oslo. Income inequality has been increasing since the 1980s, and we are now seeing a more polarised society, where the left and the right are increasingly focusing on different issues. Following and analysing these issues is part of what makes it so meaningful and exciting to be working and teaching at BI!

Jon H. Fiva is a Professor of Economics at BI Norwegian Business School  working on Political Economics, Labor Economics and Health Economics. His past research has been published in American Political Science Review, British Journal of Political Science, Journal of Politics, Journal of Health Economics, Journal of Public Economics, and other journals.