Let's Talk About Norway and Switzerland

Here are two countries you don’t hear about too often, Norway and Switzerland. With some predicting that the euro has only months left, the media has been heavily focused on the Eurozone and the European Union’s Fiscal Compact. With all of the attention focused on the European Union and its attempts to salvage the euro, it is worth taking a moment to look at how the European countries that have not joined the European Union and the Eurozone are performing.

Government debt has been one of the major driving forces behind the European crisis. Italy, Greece, and Ireland are suffering the consequences of years of fiscal irresponsibility particularly badly. Italy’s debt stands at 136% of GDP, while Greek debt stands at almost 179% of GDP. Irelands national debt is a bit lower at 108% of GDP. Although government spending was not the primary reason for Spain’s economic woes, government debt is likely to stay well above 70% of GDP in 2012.

Unemployment rates amongst the same Eurozone members are shocking. Greece has an unemployment rate of over 20%, with some parts of the country experiencing rates as high as 60%. Ireland has an unemployment rate of 14.5%. Italy has slightly better figures, with an unemployment rate of a little over 10%. Spain has the most notable unemployment rate, with over 50% of the young labor force out of work.

Switzerland has an unemployment rate of 3.1%. Norwegian unemployment is at similar levels with 3% unemployment. Additionally, government debt in both Switzerland and Norway is about 50% of GDP (pretty good by European standards). Outside of the EU and the Eurozone Norway and Switzerland have managed to isolate themselves from many of the problems in the rest of Europe. 

The Iron Lady warned of the dangers of a single currency and a European Central bank. She rightly pointed out the political motivations behind the project, and how political autonomy would be eroded as a result. The founders of the euro pledged that a single currency would bring prosperity to Europe. The experiment has backfired spectacularly. However, despite the evident danger of close fiscal union the proposed solution from Brussels is to move towards an even closer union, with the banking sector unified under a single set of regulations and legislation. To look at the examples of countries like Norway and Switzerland would be an admission of failure, something anathema to the culture of the European Union.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • LTC John||

    But, but, but...living within their means have left the Swiss and Norwegian people in nigh Third World living conditions!!1!1!

  • tarran||

    The problem, in my mind, isn't the single currency, but the unwillingness of governments to live within their means. Had governments been forbidden from borrowing from the central bank but been forced to sell all bonds to the public or do without, this crisis would be localized.

  • R C Dean||

    True enough, Tarran, but the mendicant nations soon discovered that the single currency gave them some license to spend beyond their means, for a little while, without any of the usual consequences to their cost of credit or to their currency.

    So, the Euro did its bit to make things worse.

  • Tulpa the White||

    Norway has quite a bit of oil and Switzerland is a global banking centre. Not really a fair comparison.

  • ||

    It's never easy to make macro-economic apples-to-apples comparisons. And I don't know how the central banks for Switzerland and Norway work. They may be just as wild and crazy as the Fed. And if that's the case, you're right and the comparisons are pointless. If all parties have the capability of unconstrained borrowing, then the difference in economic outcomes is elsewhere.

  • ||

    Thanks for the comment. Fair point on both counts. However, the Danes, Swedes, and Brits all have access to comparable oil deposits, and London is also a global financial center. What the Swiss and Norwegians have managed to avoid are many of the regulations and legislation than govern European financial services and energy.

  • some guy||

    It's also unfair to compare anybody to PIIGS because those countries have already proven themselves to be in the worst condition. The entire difference could simply be due well-documented social and cultural differences.

    How do Switzerland and Norway compare to the best performing Eurozone countries? How do they compare to Eurozone countries that are otherwise similar to themselves? (Norway to Finland, perhaps?)

  • mad libertarian guy||

    Sort of.

    Norway is very spend heavy. Everything is subsidized. A cow can net a farmer over $6k per annum in subsidies, which is only possible through very heavy taxation.

    Oil and gas off their coast is their only saving grace, as it belongs to the state. Once it runs out, their economy will be unsustainable.

  • Paul.||

    Norway has quite a bit of oil and Switzerland is a global banking centre. Not really a fair comparison.

    Well, kind of. That's a bit like saying, "Norway and Switzerland run things better, so it's not a fair comparison".

    That sort of suggests that Greece, Italy, Portugal, Ireland and Spain are just sort of destined to be in the shitter, because they don't have oil or haven't become global banking centres.

  • ||

    I thought oil made you poor.

  • ||

    How about we compare EU nations that use the Euro vs EU nations that don;t use the Euro...

    Of course the EU nations that don't use the Euro are doing better which would not be fair cuz any fact based evidence that shows the Euro is a failure would be unfair.

  • Paul.||

    Sorry, dudes. It's going to take a violent revolution to change attitudes. Look at how bad things can get, and the political class's solution is: more of the same, but harder.

  • Jerry on the road||

    The Swiss central bank has become the largest hedge fund in the world with all the euros it bought to help Swiss exporters. Which is silly, because with a strong Swiss franc people could finally start doing grocery shopping in their own country.

  • PapayaSF||

    I remember Jeremy Rifkin lauding the creation of the euro and how high-tax, high-regulation Europe was going to outgrow the US. Ha.

  • ||

    Is it safe to say that countries that overspend are doing worse then countries that don't overspend?

    This would seem to indicate that government spending does not help the economy and the solution would be to spend less money.

    but yeah we should talk about Norway's oil deposits instead.

  • Robert||

    My sound processor's not working, but amazingly, with the French subtitles, I not only got what they were saying in that video, but imagined they actually were speaking French. Very convincing.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement