Henry George still relevant today
Finance Minister Trygve Slagsvold Vedum visits New York
Photo: Fredrik Varfjell / NTB
Trygve Slagsvold Vedum (Center Party) is Norway’s minister of finance.
Lori Ann Reinhall
Editor-in-chief
The Norwegian American
Henry George (1839–1897) was a self-taught economist and journalist from Philadelphia, whose ideas sparked debate and led to political reforms in the Progressive Era of the 19th century. His central economic theory known as “Georgism” is based on the principle that people should profit from the goods or services they produce, but that the economic value of land, including natural resources, belongs equally to all members of society.
George’s influence was international in scope, with many of his economic theories still relevant today. On Oct. 23, students, faculty, and others learned of George’s influence on the Norwegian economy in a lecture delivered by Norway’s Minister of Finance Trygve Slagsvold Vedum (Center Party) at the Fall 2024 Henry George Lecture at the Peter J. Tobin College of Business at St. John’s University in New York City.
In his lecture “Norway’s Historical Experience with Taxing and Regulating the Exploitation of its Natural Resources,” Vedum began by underlining his admirations for George’s work. He then presented a brief look back at Norway’s history and how it related to the topic, pointing out some commonalities with the United States, before then connecting Georges’ theories to the situation in Norway today.
The historical perspective
Photo: public domain / Wikipedia
In George’s day, the railway system in the United States was rapidly expanding westward. He saw this as problematic, arguing that this boom in construction would benefit only the few who owned interests in the railroad companies and related enterprises. The land was being snapped up to their benefit, as many were left behind. For this reason, new taxes needed to be introduced on natural resources to the benefit of all people.
The situation in 19th-century Norway was not altogether different, as the country was going through a phase of rapid development. Following the emergence of a new Norwegian national identity with the adoption of the Norwegian Constitution at Eidsvoll on May 17, 1814, the country needed to rebuild itself from the bottom up. Norway had been freed from the dominance of the nobility and would be a democracy, much in the spirit of the United States.
The Norwegian Constitution was largely based on that of the United States, the oldest constitution in the world. Norway strove to create a society modeled on the principles of “liberté, égalité, fraternité” in the spirit of both the French and American revolutions.
In Norway, the “white gold” of this era was water power, as the country is blessed with an abundance of waterfalls. Investors had started to buy up the land with waterfalls to power the new industrialization, and by 1906, a large number of the waterfalls had foreign owners. Some saw that foreign capital was needed to fuel economic development, but profits were being channeled out of the country. Others wanted national control. Political battles ensued, The question was: Who do the waterfalls belong to?
Henry George argued that more government is needed as nations develop economically, that common welfare is important. Therefore, a balance between private industry and government is necessary to attain equality in society. These are the basic principles that have guided Norwegian policy in regard to natural resource management and taxation since the days of the country’s early economic development. In Vedum’s words, “The best of American economic theory has been applied in Norway time after time.”
Norway today
Norway is a country that has been blessed with an abundance of natural resources, which has led to a high standard of living. Currently, there is a 67% resource rent tax and a 22% corporate business tax in Norway.
In the case of Norway’s oil and natural gas industries in the North Sea, the combined marginal tax rate is 78%. In 1975, the petroleum taxation system was established to guarantee that the income from the oil and gas belongs to all Norwegian people. The Government Pension Fund Global, commonly known as the Oil Fund, now totals about $1.71 trillion, about four times the gross domestic product of mainland Norway. The profits help provide good public services, including universal pensions and health care.
Vedum underlined that the Oil Fund is governed by strict fiscal rules. No more than 3% of the fund can be spent by the government on an annual basis. This ensures that the children and grandchildren of all Norwegians will enjoy the same benefits and security in the future.
Beyond oil and gas, there are other industries in Norway subject to resource taxation. The aquaculture industry must also pay a resource rent tax and is an important source of revenue for the Norwegian people. In the future, windpower will likely emerge as a larger player in the Norwegian scheme of economic redistribution.
In the end, Norwegian society is built upon a high level of trust. Those in power have chosen to put the people first, which has led to a high level of equality. Thinking long-term is very important, as the government has to constantly adapt and react to ensure that the future is secured.
In his parting words of advice to the students in attendance at the Henry George Lecture, Vedum stressed the importance of reading books. “Read history,” he said. “The same ideas come back time and again.”
This article originally appeared in the December 2024 issue of The Norwegian American.
