What Norway & Chile Can Teach America
Earlier this month, the New York Times profiled how Norway took the proceeds from its oil business and plowed it into savings. As the global economy contracted last year, Norway enjoyed economic growth of just under 3 percent. This year, they're running an 11 percent budget surplus and have one of the largest sovereign wealth funds in the world.
Today, the Wall Street Journal takes note of how Chile did much the same thing with their copper wealth. Holding out against intense protests, Chile's finance minister Andrés Velasco built a multi-billion dollar "rainy day fund" which has been used to stabilize the Chilean economy during the downturn.
The contrast with the U.S. is stark. In 2000, we were running a surplus. Today, after a bi-partisan binge, we're extraordinarily deep in the red. Such fiscal irresponsibility has eroded the fundamental basis of American power: the economy. Nor have we helped matters by engaging in two open-ended, extremely costly, nation building projects in Iraq and Afghanistan.
As the examples of Chile and Norway prove - this wasn't inevitable. In both instances, democratically elected leadership held out against the natural tide of public opinion (which is to demand money be spent) and positioned their nations to better weather the economic storm now raging.