Apr 1st 2026|5 min read
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NORWAY’S TRIBUTE to Edvard Munch, Scandinavia’s most famous painter, is an impressive 13-storey slab of recycled aluminium and glass built on the harbour front in Oslo. Completed in 2021 at a cost of $350m, it was even more impressively late (by a decade) and over budget (by a scream-worthy $200m). Looming above thick mist blanketing the sea on a winter’s afternoon, the museum encapsulates the country that paid for it: sophisticated and so loaded that money is no object.
Norwegian oil has built an economy that is the envy of other rich countries, not to mention poor ones. GDP per person is a cool $90,000, behind only city-states, tax havens and Switzerland. Since 1991 the government has amassed a sovereign-wealth fund worth $2.2trn, or $400,000 for every one of Norway’s 5.6m people. Proceeds sustain one of the world’s most generous welfare states.
Yet not all Norwegians are happy about this. In 2025 the country’s non-fiction bestseller was “The Country that Became Too Rich”, an attack on the economic model by Martin Bech Holte, an economist and former McKinsey consultant. Mr Bech Holte has captured an emerging mood. In elections last September the centre-right Progress party, which argued that Norway “throws more money at problems” and needs to stop, made the most gains. The worry is that Norway’s riches are warping the behaviour of everyone from politicians to white-collar workers and schoolchildren. Confident of handsome handouts, few worry enough about the future. Can a country’s wealth undermine its prospects?
As the oil windfall and investment returns have doubled the size of the wealth fund over the past decade, it has made Norwegian politicians profligate, Mr Bech Holte thinks. Although the fund invests only abroad to avoid crowding out the domestic private sector, it funnels money back to the government, which uses it to plug the gap between spending and taxes. In 2008 that payout was a modest NKr36bn ($6.4bn at the time), or less than 5% of outlays. By 2025 NKr414bn ($40bn), a fifth of spending, came courtesy of the oil fund.
This is having perverse consequences. Politicians can put off difficult decisions. Voters see little reason to temper demands for more spending. Take health care, the government’s biggest expenditure. On average, medical services cost 30% more in Norway than in the European Union. But why reform hospitals when you can throw more money at the problem? Denmark, which spends about as much per person as Norway, has reduced waiting times for routine operations twice as fast as its neighbour to the north.
Few lawmakers bother weighing their proposals’ economic benefits and costs, sighs one. This is a weakness elsewhere, but Norway seems especially prone to it. As with the Munch museum, renovations of the parliament building in Oslo took four years rather than one and cost six times as much as expected. In 2023 the government funnelled NKr250bn, half its take from taxes on labour and capital, to foreign aid and domestic charities. That is a high price to earn goodwill abroad and salve climate guilt at home. The figure in Britain is below 10% of labour and capital taxes.
Norwegian citizens are no less profligate than their representatives. Average household debt is 250% of annual income, the highest in Europe. When you can count on national wealth to bail you out, the need to save for a rainy day feels less pressing.
So is the need to generate income in the first place. Nearly one in ten Norwegians in their 20s are unemployed, compared with one in 20 Danes. Norway’s rate of secondary-school and university drop-outs is among the highest in Europe. The higher-education system offers as many degrees as you want free of charge, plus generous loans for students. This encourages people to delay their degrees, switch them and extend their time in school. That makes for an accomplished population: more than 70% of unskilled service workers (think baristas and call-centre staff) born in Norway have masters degrees. People from immigrant backgrounds do 100,000 research jobs in science, technology and engineering, half the total. Another 100,000 will need filling by 2030.
This financial hedonism is already damaging the economy. The central bank is reluctant to raise interest rates in the face of high household borrowing, which has weakened the krone and repelled foreign investors. Worker productivity has stopped growing. Real wages are starting to fall.
You could argue that none of this matters so long as the country can provide for the current population and future generations. GDP matters, politically speaking, because it is a way to guarantee citizens’ welfare: directly, through paid work, and indirectly, through tax-funded hand-outs. In theory, that welfare can be paid for with rents rather than output. So long as national wealth rises faster than government spending, this can go on indefinitely.
That has been the case in Norway. Though the treasury milked ten times as much cash from its cash cow in 2025 as it did in 2008, this was a smaller share of the fund’s total valuation. As long as annual (inflation-adjusted) returns exceed 6%, the government may be able to reduce its tax take and raise spending at the current rate long after its oil wells run dry, which could happen in 50 years.
Such thinking is complacent, for two reasons. First, in practical terms, unless artificial intelligence dramatically boosts global productivity, returns of 6% may prove elusive. Second, and more important, a thriving economy benefits societies in ways that go beyond sustenance. Politicians are more accountable if they must ask voters for money in taxes. Foreign investors bring new knowledge. Many people find work fulfilling. All this contributes to human flourishing. No one should begrudge Norway its wealth—except, if they are wise, Norwegians. ■
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This article appeared in the Finance & economics section of the print edition under the headline “Wealth and its discontents”
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