Foreign Correspondent: Norway

Socialism at the crossroads


Tjøme, Norway. Restlessness has invaded the tranquil welfare states of Scandinavia, even Norway, which is in the curious position of being a poor little rich country. On the one hand there is a growing awareness among Norwegians that government may be the disease for which it pretends to be the cure; on the other there is a pervasive frustration with respect to what can be done about it. Gone are the days when the Norwegian people felt an almost naive trust in their politicians' integrity and paternalistic good will; the Storting (Parliament) is being described as having walls soundproofed from public opinion, and the gap between the electorate and the elected is denied by no one. And all this without Watergate, mind you.

Yet the reasons are clear, if complex. The average Norwegian is the most heavily taxed citizen of any country; the pious patience of the taxpayers has for years been a source of marvel even to socialist politicians. But now a psychological barrier has not only been reached, it has been surpassed. Inflation cum progressive taxation has done the trick.

Actually the rate of inflation in Norway is not too bad, relatively speaking; it is on a level with the U.S. inflation—about nine percent a year. But taxation is egalitarian in the extreme and brutally progressive. Apart from a steep progression in income tax rates, starting from a very low level of income, there is also a progressive wealth tax and a progressive social security tax (which encompasses health, old age, unemployment, etc.). Add to this the other taxes—on real estate, capital gains and a 20 percent value-added tax—and you already have a normal situation where above-average income families live on budgets that are stretched to the breaking point. Then along comes accelerating inflation and you know what happens.

A kind of "indexation" of taxes was expressly promised three years ago by Parliament when the value-added tax was introduced. But there has been no adjustment of the income tax rates until quite recently, despite inflation. The result is that higher incomes are being murdered; until last year no one had to pay taxes on capital and income totalling more than 80 percent of taxable income, but a year ago this escape valve was removed by the Storting and it is no longer unusual for higher incomes to be taxed at a rate far exceeding 100 percent. Of course the present political trouble in Norway does not originate from this soaking of the rich, since the rich always are a minority. But it does have the consequence that tax evasion and flight of capital abroad are becoming widely recognized as perfectly legitimate means of economic self-defense, which in fact they are, morally if not legally.


The trouble stems from the average wage earner's being pushed up into higher income tax brackets, which steadily leaves him less disposable income in real money. He gets poorer the harder he works and the more he earns—and most important, he knows it. Suddenly it has become clear to wage-earning, actively working people that not only is it impossible for them to improve their economic condition; they are realizing that this is the way the welfare state system works, and in essence, that's the purpose of it.

Since the ruling Labour Party draws its main political strength from the trade unions (which are made up of industrial workers, i.e. wage-earners) the Party is in worse trouble than it has ever been. A recent Gallup poll gave it only a voting strength of 32.1 percent—still a lot, but the lowest percentage Labour has received since opinion polling started in this country. And the percentage has been steadily decreasing since last fall, when the Labour Party gathered slightly below 40 percent of the votes and formed a minority government.

The government was formed with parliamentary support from the left-wing socialists, a mixed bag of a party consisting of Labour dissidents, populists, Marxist socialists, and communists. (Since the fifties the communists in Norway have been out in the cold, but at the last election they were included in the alliance of the far left.)

This need for parliamentary support from the left puts Labour on the spot. In order to obtain power they have to court the left-wing socialists, who confront them with the socialist slogans of the Labour Party program. But the Labour party and trade union stalwarts are well aware that they risk alienating even hard-core voters by going leftwards. Among the slogans is one which proclaims "the establishment of socialism—as the Labour Party's goal; it has been on the program for years and in practice only meant a steady increase in state power, usually in the name of "democratic control." Now Labour is being forced to put legislative teeth into their ideological linguistics.


And so they try, perhaps harder than they actually need to. They have appointed as Minister of Finance one of the Party's ideologists, Mr. Per Kleppe. With all the enthusiasm of a bureaucrat in power and all the thoroughness of a statistician he is now introducing legislation with the alleged purpose of "furthering democracy,—but every bit of it merely serves to increase government authority. (One of them is nationalization of the financial institutions—banks and insurance.) Mr. Kleppe's policies have been nicknamed Klepptomania, and they worry even high ranking Labour officials; they feel that Klepptomania spells political suicide.

The opinion polls confirm this. Why then does the Labor Party cling to power? Why doesn't it relinquish government by simply provoking a vote of no confidence from the combined opposition in the Storting? The answer is in part the easy one. People in power always cling to it But there is another reason as well: oil—the oil from the North Sea, plus the promise of oil along the Atlantic shelf of Norway's long coast and all the way up to Spitzbergen (where Norway holds suzerainty).

The North Sea oil is a bonanza which rarely if ever happens in a nation's history. Nevertheless the improbable has happened; Norway is becoming an oil-producing country. And it has happened so suddenly that Norwegians at large have not really understood the implications of it, although they are already being called the blue-eyed Arabs of the North. The revenue from royalties and taxes will start flowing into the government next year, in 1975, and will add an estimated $3 billion annually by 1980. That's a lot for a nation of scarcely 4 million souls. If the estimates are correct, Norway will in 1977 overtake Sweden in per capita GNP—and the Swedes are about the richest you've got, even richer on the average than the Americans.

Now, this wholly new national resource (everybody gets pompous and calls the oil "national resource" now) ought to result in benefits for the whole nation. All Norwegians agree on that, but that's as far as the agreement goes. Beyond this point the North Sea oil is producing a fascinating, fantastically messy debate raging mostly way above the head of the ordinary citizen because of its technical and many-sided nature. The sad thing is that hardly anybody conceives of the "national resource" being disposed by Norwegians as individuals. Most people think it self-evident that the oil be handled by the nation as a collective manifestation, that is, by the government, by the State. Thus hardly anyone disagrees with the government's establishment of the State Oil Corporation—Statoil—with the purpose of taking over the whole oil business, leaving only the crumbs needed to secure the necessary technical and financial participation to private sources domestic and international.


The socialists see the oil as their big chance, good not only for the nation but a Godsend to the Labour Party. This unexpected flow of billions of kroner will provide them with the means of decisively extending the public sector of the economy, without having to suffer the dismal consequences that ordinarily follow from socialization. And the instrument of this extension of government authority is the State-owned corporation, Statoil.

That is the strategy. The tactical gamble, which explains why the Labour government clings to power, is this: they can bear the political burden (they think) of pacifying the left-wing socialists in order to retain their parliamentary support, because as long as Labour stays in power, they will be able to use the oil billions to regain popularity before the next parliamentary election in 1977.

It's a good gamble, but I doubt that it will come off. Lest I be accused of wishful thinking, let me state my reasons. Inflation cum aggressive taxation has not only put a squeeze on the ordinary person's economy; it has also produced a deeper reaction and a very healthy one, I think. It is a kind of revulsion against politics as such, and an allergy against public interference in the individual's private affairs. I believe that Norwegians psychologically have reached the end of the welfare road, even though I admit that the welfare system is so extensive as to produce a feeling of helplessness in the ordinary person, which makes it unthinkable that he ever would seriously revolt against it.

I even must admit that the nonsocialist politicians have been extremely muddled, unprincipled and demagogic in their thinking about the whole relationship between the State and the individual. For that reason they have lost the confidence of the voters and consequently the opportunity to take full advantage of the quandary into which the socialists have gotten themselves. The nonsocialist parties comprise so broad a spectrum of interests as to be paralyzed on all questions of principle. They did form a coalition government between 1965 and 1972; it broke upon the question of Norway's membership in the European Economic Community. Before the Cabinet gave up, however, it had levied taxes and proposed inflationary policies which made them lose every claim in the individual voter's mind to being an alternative to the oppressive policies of the socialists.


And that accounts for a curious phenomenon which occurred in the parliamentary elections last fall. Almost overnight a new party sprang up, with no program other than "Sharp Reduction 1) of Taxes, 2) of State Interference and 3) of Public Meddling in Private Affairs." It was formed by—and around—Mr. Anders Lange, an original (some would say eccentric) personality, amateur politician and a very colourful and popular public speaker. He professes open admiration for Barry Goldwater, Milton Friedman and Ayn Rand. The professional politicians right and left laughed at him, but he did capture five percent of the voters, receiving 4 mandates (seats) in the Storting. (The phenomenon is a parallel to the "Progress Party" of Mr. Mogens Glistrip in Denmark.)

The trouble with Mr. Lange is not that he may strike many people as being rather eccentric; it is that although he is intelligent enough, he is no systematic thinker. His mind is uncluttered by the sophisticated concepts that govern public administration and economic policies. That is his strength as a public speaker, but it is his weakness in Parliament. Thus a whopping 30 percent or more of the voters regard him with sympathy and consider him most useful, according to the opinion polls—but only four percent now declare that they would go as far as to actually vote for him.

And that's the problem. Mr. Lange is a true libertarian in his own, highly personal way, and he has the biggest potential following of any political personality in Norway. But it is proving difficult to translate this potential into actual political clout. Perhaps it's a dilemma central to libertarians—always and everywhere?