Is this the “68 generation” that first went on a spending spree and is now arguing in favour of saving to secure their own pensions? 5 Moreover, all we have to do is read today’s press to understand that it is not a matter of course that economic growth will maintain its current pace. It is not a given that our children will be that wealthy. For those with roots in agriculture, it is second-nature to leave the farm in at least as good shape as when it was taken over. A policy of high and rising spending, which would crowd out internationally exposed industries and lead to unsustainable public expenditure levels, would be a heavy legacy to leave behind. The next generations would have to increase taxes substantially because of our consumption. If we, as a nation, set money aside instead, our wealth will grow and contribute to improving prosperity for our children. Spending and saving are mutually exclusive actions. The definition of saving is quite simply to abstain from spending. But with Norway’s huge oil revenues and the return on the portion saved we can increase spending while accumulating considerable savings. But spending must be adapted to the return on the portion saved. Sound and long-term management of oil wealth also requires separating saving decisions from spending decisions. The fiscal rule sets an important cap. 6 The rule states that petroleum revenues are to be saved, while the government may spend the return on the oil fund.
After his death, Collett’s heirs insisted on maintaining an extravagant lifestyle as if the income was still intact. Their wealth rapidly withered away and in 1829 the coffers were empty. The farm was taken over by the state. 1 The time it took Collett to make a fortune is about the same as it took Norway to build up its oil-based financial wealth. Nearly 40 years after Phillips Petroleum discovered commercially viable oil reserves in the Ekofisk field 2, we have an oil-based sovereign wealth fund worth more than NOK 3 trillion. Few other countries are sitting on such huge financial reserves. But our wealth primarily comes from other sources than the oil fund, now called the Government Pension Fund Global. The value of our current and future labour resources is more than ten times as great as the value of our oil and the oil fund combined. 3 The oil fund would be depleted in three years if government tax revenues were to disappear entirely. Our economic future depends above all on our capacity to produce goods and services that others value. But the visible oil revenues may give the impression that we have a huge treasure trove at our disposal. Sound wealth management is therefore first and foremost a question of maintaining and developing the value of our productive resources, particularly our labour resources. A nation that comes into a large fortune must make a number of choices and trade-offs. They can be considered from a legal, ethical or financial standpoint.