Smaller countries have an easier time getting policies like this pushed through. Because there is less political will required, less resistance from group which would prefer to entirely privatize oil wealth, and more political capital to be gained (comparatively speaking) from pushing a policy like this which is popular with the people...

What i'm saying is scale matters greatly in democracy.

You still need consensus. If you have two citizens you can still have deep divides. So, no matter how big the country, you still need the political will to do it. For example, there are Norwegians wanting to do US style conservatisism,but they don't get anywhere because there is political will to do something else. In a democracy, you still need 50%.

Sovereign wealth funds are fairly common especially for countries with oil money that wasn't viewed as a private asset but as a public one. The US could have done this, but chose instead to give away public resources for pennies on the dollar to corporations. That is arguably just a giant subsidy for our oil companies but not traditionally included in the $5 trillion subsidy number.

Yes, this is another example of socialism generating better results than capitalism. If you want a small number of wealthy people and a lot of poor ones, go for feudalism or unregulated capitalism. If you want a wealthy populace, mixed economies are your best best.

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You'll notice that most countries with sovereign wealth fund are ones that nationalized their oil. Norway, Saudi Arabia, Qatar, but other countries have them also, including China and Singapore. Of course, you won't find them in countries with no state enterprises and perennial deficits.

Yeah, nationalising your oil works great. Just look at Norway, Saudi Arabia, Qatar and Venezuela.

The Sovereign Wealth Fund in Norway isn't very capitalist. They essentially set aside profits for decades and just saved it all up, because they realised that oil won't last forever. It's a smart plan to make an industry more sustainable, but it's rather too late for most places to copy. It came up a lot during the Scottish IndyRef campaign, where the SNP planned to create one for Scotland in the event of independence. But with the small reserves left in the North Sea (particularly once they're cut in half for an independent Scotland), it would have nowhere near the same level of input.

And then, of course, the oil prices crashed and the entire SNP economic plan looked about as good as Maduro's Venezuela. Good thing they didn't win the referendum.

Alaska has a Permanent Fund worth $55 billion. Dang socialists.

At the end of the day it's just an exercise in marketing. A government raises and spends money as it sees fit. All a sovereign wealth fund is is some of the spending invested in foreign and domestic companies and the like instead of investing in schools, hospitals and infrastructure. This makes a degree of sense if your economy, by virtue of, say, vast oil reserves and a small population, finds itself with more money than it can efficiently spend. For countries that would benefit from increased infrastructure spending investing money in a sovereign wealth fund instead of them seems foolish.

Eh. In the case of Norway it's more like a pension for the country. Once the oil runs out, the pension is there to support them.

It seems to have worked well for Norway. Even for them, however, you have the argument that perhaps it would have been a better option for the government to invest in developing other parts of their economy rather than investing in, say, the Dakota Access Pipeline. I'd also be extremely interested in hearing how Norway justified investing in foreign property when its hospitals have considerable waiting lists.

@' The US could have done this, but chose instead to give away public resources for pennies on the dollar to corporations. That is arguably just a giant subsidy for our oil companies but not traditionally included in the $5 trillion subsidy number. '

Alaska has at least partially. They turn oil profits into a universal income for all Alaskans*. Not enough to live on, and Alaska does have a huge amount of natural resources contrasted with a tiny population density... but still at least they tried.

*How this is defined is unclear to me.

Yes, Contrast that with California which recovers no income from oil extraction. Bizarre.

The 'capitalist' element of this is that they're investing capital (accumulated from the oil industry) in whatever is most profitable, and living off the income.

Seems like a perfect example of how capitalism is supposed to work.

Australian government has a Sovereign Wealth fund as well but its only got about $250 billion. Its seed funding came from the Sale of public assets and corporations. If ti were bigger, our politics has gotten so bad lately that it'd be pilfered to pay for election promises.
These things last only as long as the political and public will lets them.

A question for Wusti. Why, in your view, is it better for Australia to have a sovereign wealth fund investing in global projects than for Australia to invest in, say, its own high speed rail network? Or to invest in improvements to the healthcare in places like Tasmania that significantly lag behind the rest of the country?

To me a lot of sovereign wealth funds are equivalent to the sort of households who take delight in having a healthy looking chunk of money saved in their bank, but have done so by not fixing the leak in the roof or replacing old and drafty windows.

It's a good question, octavious. (And I'll point out that those wait times are for non critical elective surgeries, so represent less of an issue than it appears. Still waay shorter than the US where a good chunk of the population face infinite wait times for elective surgeries).

I think the theory is that these funds arose because of decisions that big flushes of wealth shouldn't be spent by the government then in power but rather invested so as to improve future budgets. The earnings on the Norwegian fund can produce a substantial contribution to the budget without eating into the capital


It's more like a lottery winner investing the winnings and then living off the interest so as to leave something for the rutile rather than blowing it all on a spending spree.

That's my understanding of the theory.

As usual Ogion thinks everything is about him.

Octavious - the premise of your question is that it is one or the other - I question that. Certainly at the time of setting up the fund the Australian economy was at risk of serious over-heating and injecting more cash would've been unwise. So timing was a factor.

Another factor in Australia's case was that a large portion of the public service were involved in a defined benefit superannuation scheme which was unfunded, because previous governments had never actually put aside the "superannuation contribution" and instead allowed it to go into consolidated revenue - the Sovereign Wealth Fund was set up and justified in large part to provide the funding base for that public liability.

As far as I am aware there have been no capital additions to the Fund in over a decade, but returns have been compounding into it since its inception, growing it into the current size.

So in the Australian case it was both saving to cover future liabilities, and its set up helped to stabilise the growth rate at that time.

What is your problem, Wusti? You think that you have some god given right to be the sole interlocutor? What an ass!

And basically, Wusti repeated what I stated: sovereign wealth funds help stabilize the long term budget.

Octavious said " A question for Wusti" - but you answered for me. So yeah its all about you, you pretentious ass.

Also - thats not what i said.

Octavious did direct his question to Wusti, but others may contribute a response to his question, imho. Octavious asks a "opportunity cost" question... Australia could invest in domestic infrastructure &/or more funding to its "universal public" health services.. &/or sovereign fund investments using revenues from minerals exploitation, when a nation has a surge in those revenues.