Norwegian Ambassador to the United States Kare Aas was recently in Anchorage and Petersburg in recognition of the May 17 Norwegian Independence Day, Syttende Mai. At a press conference, Lise Falskow of the Alaska World Affairs Council asked the ambassador if he had advice for Alaskans dealing with their $4 billion budget shortfall. With characteristic Norwegian composure, the ambassador answered no. If he had answered yes he would have embarrassed his Alaska hosts.
Norway is an Arctic and subarctic oil-producing nation with many similarities to Alaska. Unlike Alaska, which funds much of its government services from oil revenue, Norway does not. Consequently, the half-year dip in oil prices has had little effect on Norway, while Alaska has a significant budget problem.
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Norway does tax oil operations but it is part of a little-understood Nordic Model. Many think the high taxes, up to 42 percent in direct and indirect taxes, are just a contribution to bloated bureaucracy, as taxes are often characterized in Alaska.
Not so. Personal and sales taxes are an integral part of a system to keep families viable, healthy and happy. The key elements of this family-based social engineering agenda are child care, tuition-free college education, free health care and retirement benefits for life.
High quality child care is provided by professionals. This means mom or dad can work without the stress of leaving work early, rushing through traffic to pick up the kids on time. Kids are socialized to other children early on and respond to a variety of adults. Women can be mothers and employed without experiencing the intense daily anxiety of most American mothers. There is no mommy track in Norway.
Students can go to college or technical school for free. Ask any U.S. college student what the biggest stress in their lives is and the answer will be, "How to pay for college." It's not unusual for 20-somethings to come out of a four-year degree owing $100,000. Many drop out because of the cost of an education. That's not an issue in Norway. Young people can graduate debt-free, get a job, fall in love, get married, have kids, and all they have to do is pay for rent and groceries.
Health care is free and high quality. No one in Scandinavia skips the doctor because they can't afford it.
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Of course nothing is free; high taxes pay for all of this. But here is the poorly understood part; at least it was to me before I read an essay by Ann Jones. By providing a relatively stress- and cost-free avenue for men and especially women to move into the workforce and still have a family life, the Nordic Model generates significantly more in taxes because of a high level of largely debt-free income, particularly family-based dual incomes. That is different than, say, the U.S., where one spouse often has the higher income and the other a lesser-paying job just to pay for child and health care.
Norway, unlike Sweden, Denmark and Finland, does have oil and taxes it significantly, including the partly state-owned Statoil. Most Norwegian oil taxes go into the Government Pension Fund, now worth about $80 billion. Its function is to provide retirement income for every Norwegian. Economically, this means that companies or state-run government or educational institutions do not have to provide retirement benefits; nor do individuals have to set aside a part of their monthly paycheck for retirement. They also, of course, don't have to save for a child's college education or pay for medical insurance or the unexpected emergency surgery.
That money, in effect, is a rolling economic stimulus because it is spent, not saved, and works its way through the economy also increasing income and sales taxes. With the Nordic Model, the Scandinavian countries have the least economic distance between rich and poor of any nation, creating a strong middle class. That's good, because revolutions occur when the rich get richer and the middle class gets poorer.
The Nordic Model teaches Alaska three things: 1) We need not fear taxes and can fund government through income and sales taxation, not only from oil revenue. 2) We can help put people to work through state and federal government subsidized services — child care; low cost, high quality education; and health care — that will pay for itself if we have income and sales taxes, and 3) Alaska needs to create an economically and socially good purpose for the Permanent Fund earnings — not give them away or fund normal government operations.
Alan Boraas is a professor of anthropology at Kenai Peninsula College.
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