Norway’s central government currently manages three main asset pools. There is the Government Pension Fund Norway (GPF-Norway), a stock and bond portfolio that is invested in Norwegian and other Nordic companies;25 the Government Pension Fund Global (GPF-Global), a stock, bond, and real estate portfolio invested exclusively outside of Norway;26 and the state-owned enterprises (SOEs), a set of 74 domestic companies that are directly owned by 12 government ministries.27
GPF-Norway and GPF-Global are social wealth funds. The SOE assets, because they are owned directly by ministries rather than through a fund, are not technically a social wealth fund. But the SOEs are nonetheless in the spirit of a SWF and could be rolled into a SWF if the Norwegian state wanted to do so.
Adding up all of the wealth collectively owned through the Norwegian state produces some truly staggering figures. At the end of 2016, GPF-Norway controlled assets equal to 7 percent of Norway’s GDP;28 GPF-Global owned assets equal to 241 percent of GDP;29 and the SOE equity holdings were valued at 23 percent of GDP.30 Thus, all together, the Norwegian central government owned assets equal to 271 percent of the country’s GDP in 2016. To put this in perspective, for the US government to own a similar amount of wealth, it would need to build a $54 trillion social wealth fund.31
The SOEs, GPF-Norway, and other local government funds combine to own a little more than one-third of all the equity listed on the Oslo stock exchange.32 This level of ownership is nearly 5× what the Meidner plan achieved before it was halted.
Due to its collective wealth funds and SOEs, the Norwegian government owns around 59 percent of the country’s wealth. To reiterate: 6 out of every 10 kroner of wealth in Norway is owned by the state. When you exclude owner-occupied homes from the calculation, you find that the state of Norway owns 76 percent of the country’s non-home wealth. For comparison, the Chinese government owns only 31 percent of its national wealth.33
These holdings generate a considerable amount of income. Over the last 10 years, the conservatively-invested GPF-Global generated an average annual return of 5.9 percent.34 Over the same period, GPF-Norway had an 8.3 percent average return.35 In 2017, GPF-Global generated a return 1,028 billion kroner while GPF-Norway had a return of 26 billion kroner.36 In 2016, the soe portfolio produced a 33 billion kroner dividend for the state.37 Adding the 2016 SOE figure to the 2017 figures for GPF-Norway and GPF-Global gives you a total return of 1,087 billion kroner or $133 billion.38 Had that money been paid out as a dividend to all 5.2 million Norwegians, it would have provided each with $25,500, or $102,000 for every family of four.
The Norwegian funds are also efficiently administered. In 2017, GPF-Global’s expenses were equal to 0.06 percent of its assets under management and GPF-Norway’s expenses were 0.07 percent of its assets.39 These expense ratios are near the lowest in the world, even when comparing them to private asset management, and this is despite the fact that the funds are actively managed.
To be sure, Norway is an outlier in the world in terms of just how much wealth it has accumulated in its various SWFs. But this is also what makes it such a promising example. The idea that a society could collectively own three-fourths of its non-home wealth through social wealth funds administered by a democratically-elected government without any negative economic consequences would be rejected as preposterous by most political and economic commentators in America today. But that is precisely what Norway has done and seemingly what any country could do if it has the necessary will and competence.
Vir: Matt Bruenig, People’s Policy Project