Punitive Communitarianism

After reading this article in Aftenposten, a Norwegian English language daily, I think I've come up with a new take on an old idea.

The thing going on in that fine Nordic country can only be described as punitive communitarianism. You're going to love your fellow man, even if it kills you. It's hard to measure comparative tax burdens, but I think an interesting measure is to look at what the government revenues are on a per capita basis, and by percentage of GDP.

When measured that way, the story in Norway is mindboggling.

Norway's a small country population wise, a wealthy one too. According to an article last week on the same website, they have the most 'dollar millionaires' per capita of any nation. Their per capita income is slightly better than $46,000 per year, putting them sixth on the per capita income list as ranked in The World Factbook.

For the sake of comparison let's look at the top nine (plus two other countries/dependencies) as ranked by the CIA.

#1 on the list is tiny Luxemborg. Population, 480,222, population growth rate of 1.207%, GDP (purchasing power parity) $33.87B, and a per capita of a whopping $71,400. Government revenues are 19.07B. That translates to 56.3% of GDP, and a per capita rate of government revenue rounded to about $39,700.

#2 on the list is Bermuda. The shorts business must be booming, that or lots of European tax exiles distorting the figures. Also, not fully independent of the UK. Population 66,163, population growth rate of .576%, GDP(ppp) $4.5B, per capita $69,900. The government revenue collected is a relatively minuscule $738M. That's only 16.4% of GDP, and a per capita govt revenue around $11,200 per shorts wearing Bermudan.

#3 on the list is Jersey. Another island dependency of the UK high on this list. Population 91,321, pop growth .244%, GDP(ppp) $5.1B, per capita $57,000. Gov't revenue only $829M. 16.3% of GDP in gov't revenue, which figures to a per cow/person basis around $9,000.

#4 on the list is Equatorial Guinea. An oil rich African military dictatorship that despite great wealth suffers from 30% unemployment and yet is still a destination country for the trafficking of children for labor and women and children for sex work, not exactly a tropical paradise. It's a poster child for how great natural wealth in a country doesn't equal prosperity, but the numbers look great on paper. Population 551,201, growth rate 2.015%, GDP(ppp) 25.69B, per capita $50,200. Gov't revenue 2.752B. 10.7% of GDP in gov't revenue, around $5000 per capita.

#5 on the list is United Arab Emirates. An oil rich Arab country on the Persian Gulf. Pop 4,444,011. Growth a very frisky 3.997%, GDP(ppp) $129.5B, per capita $49,700. Gov't rev is $60.3B, which gives them 46.6% gov't rev. as share of GDP, and shakes out to $13,600 per sheik.

#6 on the list is Norway. The poster child for a communitarian social welfare cradle to grave managed market paradise. Don't let the whiners in the article linked above scare you away with their tales of $9/gallon gasoline, or 2.5% tax on all real estate transactions. Instead revel in the numbers. Pop 4,627,926, growth rate a reserved .363%, GDP(ppp) $213.6B, per capita $46,300. Govt rev $195.8B, which only somebody who doesn't love their fellow man would complain about it's 91.7% share of GDP, or its per capita burden around $42,300 per Norwegian not pining for the fjords (no need to pine when the fjords are a short drive away, or maybe you might pine a little when you realize how much the petrol bill will run should you choose to drive to said fjords when all those gas taxes cause the cost of a gallon to be northward of $9).

#7 on the list is Guernsey cause the one thing you can't get enough on this list is UK dependencies. Another English Channel Island with a really high per capita income rate. Pop 65,573, growth .239%, GDP(ppp) $2.742B, per capita $44,600, gov't rev 563.6M. Comes out to a modest 20.6% and only $8,600 per Guernsey cow/person.

#8 on the list is Ireland. Yes, Ireland, the Emerald Isle, is now the surprisingly rich Emerald Isle. Pop 4,109,086 (isn't there more Irish than that in Massachusetts?), pop growth a healthy for Europe 1.143%, GDP(ppp) $180.7B per capita $44,500 (that's a lot of potatos), gov't revenue a reasonable (for an EU nation) $75.49B. That's a percentage of 41.8% and a per step dancer rate of $18,400.

#9 on the list is the greatest country in the history of the whole universe. That's right, it's the U S of A. Love it or leave it, as they say. Pop 301,139,947, pop growth .894%, GDP(ppp) a mind boggling $13.13 Trillion, per capita at an impressive $44,000. Government revenue is an obscene $2.409T (I bet we could get by with only $2T). Despite the government revenues seeming crazy, it's just 18.3% of GDP, and around $8000 per person.

Now let's look at the two places most similar to Norway in population for comparison

Georgia has 4,646,003, pop growth is -.329%, GDP(ppp) 17.88B, per capita income a paltry $3,800 (might help explain the negative growth rate), gov't revenue is $1.726B. That's only 9.7%, and only $372 per person. That's about as far away from Norway as you can get.

Singapore has 4,553,009 folks, pop growth 1.275%, GDP(ppp) 141.2B, per capita a solid $31,400. Gov't revenue is a restrained $19.71B. That's a rather unburdened 14% and a manageable $4300 per Singaporean.

I'm sure there's a reason that economists don't look at that number, or calculate government revenues as a percentage of GDP. Gov't revenue comes from many sources, and countries with lots of nationalized industries would have their results skewed (like Norway). But I think it gives you a sliver of a picture of the type of society a country has developed. Norway's punitive communitarianism is only sustainable so long as the government controls some natural resource that brings in solid revenues (in their case, oil). It's certainly better that they use that revenue on their people when compared to a country like Equatorial Guinea where all that oil wealth is just going to the few. But just looking at the numbers, Ireland would seem like a much better place to work and do business in Europe (and companies and people have been drawn there because of their low taxes, and still decent services), United States despite its huge economy manages to get by on a relatively small tax burden for a mature economy. Also, Singapore really does kick a lot of ass when it comes to economic freedom and pro-growth policies, too bad about the authoritarian streak when it comes to everything else.

Seems like Norway's way isn't as appealing as it once was for Norwegians, and that kind of punitive taxation must scare away any sort of business that isn't looking to work within the public or government controlled sector. That's not an environment that encourages innovation or problem solving skills. Looking at the top nine places in terms of GDP, Norway, Equatorial Guinea, and United Arab Emirates would collapse if oil prices dropped back down below $30 a barrel (not likely anytime soon barring a new technology drastically changing energy production and usage). Norway's screwed if that happens, they just don't realize it. Economic activity alone can't support the massive revenues their government demands. At least the folks in Norway are starting to question the point of tacking on punitive fees for every activity that people might engage in. And not surprisingly, all the various communitarian oriented NGOs and UN commissions think every place should be like Norway and Norway ranks highly in their rankings.

One last article from Aftenposten, if you want a good example of what happens when you put crazily punitive taxes on everything, two words for you, MEAT SMUGGLING.

(quit that snickering in the back, what's so funny about the phrase, 'meat smuggling'?)