Norway: The Cost of Safety

The good life and a struggle against red tape

On late summer afternoons, fleets of private boats jam the Oslofjord; in winter, thousands of Norwegians spend their weekends on the country's ski slopes or on quick trips to resorts in balmy Spain. About 75% of all Norwegian families own their homes and close to half also have vacation retreats--a cottage on the coast or a cabin in the mountains. The humble Volkswagen has been dethroned as king of the road, replaced as Norway's best-selling car by the more luxurious Volvo.

With a per capita G.N.P. of $7,420, Norway has one of the world's highest living standards. Whether such bounty results mostly from the drive of 4 million people inured to hard work in a cold, rugged land or primarily from the social-democratic policies pursued by the ruling Labor Party of Premier Odvar Nordli is unclear even to Norwegians. Confesses Sverre Badendyck, a retired sea captain now employed as a shipping inspector: "We think we live in a capitalist country. Or at least in one with a mixed economy, with a socialist government trying to make it more socialist. But we honestly don't know what we have."

Norway tolerates a considerable amount of free enterprise. All but 9% of industry remains in private hands, although the fledgling North Sea oil industry is state-owned. Nonetheless, one of the world's most comprehensive welfare states has been fashioned by the Labor Party, in power for 36 of the past 43 years.

The folketrygden (people's security) law grants everyone disability, old-age and survivors' benefits, rehabilitation assistance and unemployment payments. Other measures provide free hospitalization, surgery and medicines. Youngsters through the ninth grade receive dental care at their schools at no cost. Every worker is guaranteed at least four weeks of paid vacation.

Taxation rather than nationalization has been Labor's method of building Norway's socialism, which the party defines as "equality among all individuals and groups." Steeply progressive personal taxes (50% for a couple earning $30,000) have helped to level incomes. Says Christian Erlandsen, managing director of an Oslo auto parts firm: "After taxes the difference between me and the lowest-paid guy at this company is not very great. You can't look at just income; you must look at other values. We have our cabins, our spare time. What may be most important to me is my feeling of safety. I'm not thinking of crime as much as of health and retirement benefits. If I were to die now, for example, my wife and 15-month-old son would get 80% of my present income for some time. That's safety."

Business earnings are also heavily taxed: 30% by the national government and 20% by municipalities. Explains Erlandsen: "The highest cost my firm has is its tax cost. To reduce our tax burden, we share profits with our employees or reinvest them somehow." One of the most common means of sharing is to give employees valuable but tax-exempt "perks," such as trips to mountain resorts and the use of company-owned cars and houses.

The Labor Party tries to regulate what it does not tax. Although farm land remains in private hands, most farmers have been put under legal and financial pressure to join state-dominated cooperative marketing groups.

The government's most ambitious attempt to restructure the economy while permitting private ownership has been to give workers a voice in corporate management. A 1972 scheme for "industrial democracy" requires all firms with more than 200 employees to give worker representatives one-third of the votes in the new "corporate assemblies" that replaced the traditional shareholders' meeting. Another idea being contemplated by the Labor Party is the "Gjest Baardsen fund," named after the legendary Norwegian version of Robin Hood. Like its name sake, the scheme would take money from successful companies and give it to unprofitable ones for salary hikes. Still other future programs would, according to Premier Nordli, continue slashing "differences in pay, wealth and other advantages."

There are signs that Norwegians worry about too much socialism. The growing tax burden apparently prompted segments of the working class to vote conservative in the last two parliamentary elections. A more widespread form of protest is tax evasion. One method is to avoid cash transactions whenever possible. A clothier and a farmer, for example, exchange a new suit and a side of beef; a dentist fills the teeth of an auto mechanic in return for a car lubrication. Another method is "black labor." Example: a company wishing to redecorate its offices pays cash for the work, but does not record the transaction; the decorator pockets the entire amount, while the firm writes off the expense as damaged or stolen goods.

Although Norwegians have no intention of dismantling their social net, they are becoming increasingly irritated at its red tape. Says Ragnhild Braathen, a Telemark housewife: "The regular citizen struggles against a wall of bureaucracy. People have waited 20 years before receiving their disability pensions. I know a woman who applied for 'single provider assistance.' She is still waiting for an answer and her 'child' is now 35 years old." Complains Kjell Lorentsen, a schoolmaster in northern Norway: "Responsibility for any decision seems to dissolve into powder."

Norwegian economists fear that the state's generosity may be adversely affecting the country's economy. Norway's production costs are already the globe's highest and in large part are responsible for the country's more than $5 billion trade deficit last year.

Passage of the Robin Hood fund

would make matters worse by penalizing efficient and innovative enterprises. High taxes discourage overtime work, while generous sick pay spurs absenteeism, which has doubled in recent years. On the average, 10% of the work force now stay away from the job daily, and in some plants the figure reaches 20%.

Surveying the costs of the welfare state, a businessman confesses: "I'm a little bit scared of the future." Still, Norway's variant of socialism stands a good chance of thriving--if only because of potential benefits of North Sea oil. Like the petro-socialists in Libya, Iraq and Algeria, Norway's Labor Party can count on bankrolling its welfare measures with its oil earnings. This is a route to democratic socialism which few other societies have the luxury of imitating.

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