Imagine if a country followed the MMM rules...

[K-ice]

Hello Norway!

http://www.theglobeandmail.com/report-on-business/international-business/european-business/norways-sovereign-wealth-fund/article25973060/

Extream savings, 4% withdrawal, diversified investments...

[mohawkbrah]

the suggestion of a fiscally responsible gooberment is insane!


you should know better!

[G-Freedom]

If a country followed MMM rules it would be super rich :D I have been following them as an individual for a while and been watching those zeros pile up. Even though the zeros are ultimately a simple illusion created by a bankers wand, it does feel good to see em.

www.artofselfhood.com

[rob in cal]

    IIRC, South Korea had a huge personal savings rate because the country didn't have a government run retirement program like social security. Don't know if thats still the case.

[nobodyspecial]

The norway story isn't quite as rosy. They only started the wealth fund 30 years after they started getting real oil revenue and only after the oil boom caused a couple of major recessions (https://en.wikipedia.org/wiki/Dutch_disease)

They still have the same high taxes as other Scandanvian countries, but unlike Sweden (which doesn't have oil) they have no industry other than oil.
The fund is vulnerable to special interest politics, it's already used to heavily "support" subsistence farming and anything else that can claim to be a traditional way of life. It has led to the rise of far-right politics, since those foreigners/different religion/different color want "our" money and keeps them out of the Eu.

[Albert]

Plus it's really only feasible if the money is literally flowing out of the ground. Few countries are that lucky. By the way everything there is crazy expensive even when compared to Sweden. Nature is beautiful though so if you can afford it not a bad place for a vacation.

[nobodyspecial]

Plus it's really only feasible if the money is literally flowing out of the ground.

That came up here in the Canadian election - when people asked what all Alberta's oil revenue had been spent on now that it is bankrupt following the drop in oil.

Quote from a politician about how countries like Norway and Venezuela had money because their oil was so easy to get to.
I don't think they had ever visited an offshore oil rig in the Norwegian sea in winter

[Sjalabais]

Posting from Norway here - the fiscal rule is usually obliged but our huge housing bubble is about to burst and the labour market is getting wobbly due to the low oil price and the heavily falling currency. We'll see how disciplined our government will be.

Contrary to nobodyspecial's believe there is still some big industries left, particularly mineral extraction and refinement, aquaculture and military technology (of all things).

Also, MMM rules would imply that the money being used is actually distributed in a meaningful way. Most of it might be allocated logically, but there's a massive amount of political horse trading. The world's longest tunnel was digged out in the middle of nowhere when a very long route between our capital Oslo in the east and the second city Bergen on the west coast was decided in favour of politicians from that area. This road building paradigm is true to this day. Hospital allocations and the inefficient "saving" of maintenance in order to get huge bills later for having to build new public buildings like schools are common. Police has been discarded in many municipalities due to low crime, but a lot of the crime that exists is not being solved (even 2% of the crimes with known offenders are never put forward to the justice system due to police work overload).

Norway does very well in international comparisons of living standards etc due to the oil income (FI income?) and sort of good governance. But there's sure room for improvement.

[Bob W]

I don't think it would work too well in the US.  So let's say the government was just a little mustachian and saved and invested a mere 10% of revenue.  It wouldn't take too awfully long before the US was the major stockholder of all the businesses.   That would be disastrous.

It would be much better if taxes were reduced by 10% across the board and then not allowed to increase for several years.   You can only manipulate the US budget slightly without a huge impact on lots of people.   Even cutting the military budget to near zero, which I am in favor of,  could be bad news unless the money was directed to things like energy efficiency upgrades.

Oh wait that is a great idea --- instead of pissing away money killing people in far off lands,  how about investing all that money in clean renewable energy.   $4,000 per year, per household could buy a lot of solar panels, insulation, heat pumps and LED bulbs.  Nah, that would never fly. 

[forummm]

I don't think it would work too well in the US.  So let's say the government was just a little mustachian and saved and invested a mere 10% of revenue.  It wouldn't take too awfully long before the US was the major stockholder of all the businesses.   That would be disastrous.

It would be much better if taxes were reduced by 10% across the board and then not allowed to increase for several years.   You can only manipulate the US budget slightly without a huge impact on lots of people.   Even cutting the military budget to near zero, which I am in favor of,  could be bad news unless the money was directed to things like energy efficiency upgrades.

Oh wait that is a great idea --- instead of pissing away money killing people in far off lands,  how about investing all that money in clean renewable energy.   $4,000 per year, per household could buy a lot of solar panels, insulation, heat pumps and LED bulbs.  Nah, that would never fly. 

Interestingly, Norway actually does subsidize electric cars. Teslas are pretty popular there.

[Sjalabais]

@Bob W, that's actually what I would have preferred massively instead of the electric car subsidies - it has a more lasting, valuable impact than subsidizing personal transportation. ENOVA is the government agency that supplies subsidies for energy effective home upgrades, but they could do much more.

The subsidies for electric cars are massive. Just buying them leaves you much better off: A Tesla S, for a long time the most sold car in our country of 5 mio people, costs about as much as a base Volvo XC70, another very popular car. Yet comparing actual figures, the S is more comparable to the Porsche Panamera, which costs 2-3x as much as the S because of taxes that electric car buyers don't need to pay. In addition, electric cars can use bus lanes, park and charge for free all over the country, and they can use ferries for free. That has odd implications. Ferry company's budgets have been destroyed because people on islands usually buy electric cars - so the ferry companies haggled themselves to massive compensation that are a burden on the state budgets. In snobby Oslo, electric cars are now required to seat at least two people in order to be able to use the now-crowded bus lanes. Thus, our überrich capital inhabitants take their au pair with them to work, who then take the bus home again...

[mpcharles]

Germany is kind of like this. All cash debt averse no one has a credit card. Though only investments are property or gold.

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[Sjalabais]

Germany's history with hyperinflation in the Weimar Republic and the almost total loss of assets that WW2 was pretty much explains it all. But their property market is incredibly stable, and price rises are small.