Sunday, January 16

A new era for right-wing economists

Wind turbines in Denmark

While Sweden and Denmark realize green industrial projects, Norway is worst in class. Norway’s adaptability and competitiveness have been weakened by the right-wing economists’ state phobia.

  • Jonas Algers

    Social economist in Manifest left-wing think tank

Published: Published:

This is a chronicle

The chronicle expresses the writer’s attitude. You can submit articles and debate posts to E24 here.

The debate on climate change has begun to take a familiar form: The unions, parts of the business community and the environmental movement seem to have found a narrative to stick a straw in the treasury – only economists offer resistance.

The Conservatives’ economic commentators as Bård Bjerkholt, Steinar Juel, Ola Kvaløy and Lars Peder Nordbakken, have written a lot about why the state should not “pick winners”, and that green industry must “stand on its own two feet”. Future generations will not work in green industry either, but as “hairdressers and nurses” in the service sector, as Civita economist Steinar Juel said in NRK Debatten (4/11).

The climate economics the debate in the english language media, on the other hand, is moving in a completely different direction. “The state has returned to the orthodoxy of economic policy, and the same applies to a form of economic planning,” wrote the Norwegian economic commentator Martin Sandbu in the financial elite newspaper Financial Times in October. In November, one could read in the editor’s office that “governments must plan (the energy transition), just as they plan motorways, airports or broadband development”.

A similar rhetoric about financial planning had been impossible for politicians on the Norwegian left.

When Norway is to develop new industries, right-wing economists have no answer.

Every year invests the norwegian state around 25 billion via petoro in its domestic petroleum industry, which accounts for almost 60 percent of merchandise exports and seven times the investment for the rest of the industry. But the right-wing economic commentators are convinced that the state should play as small a role as possible in climate policy. What does it come from?

My hypothesis is that the Norwegian debate is different because the large oil revenues have meant that for a long time there has been no need to formulate policy for economic development. When Norway is to develop new industries, right-wing economists have no answer.

“The markets have something mechanical, anonymous and genderless about them, they have almost become the domain of robots,” wrote Ola Kvaløy, professor of economics at the University of Stavanger, in DN (28/19), in a text in which he argued that “economics is right-handed ». The market appears as a black box that produces an output, not a number of players who, to the best of their ability, relate to and influence prices.

For energy security reasons, they have been forced to take a more practical approach to business policy, something they are grateful for today.

With such a relationship to the market, the solution to the climate threat is: “get prices right” with a CO₂ tax, trust the market mechanisms and wait for a result, instead of making decisions based on available information. Optimizing the market for better economic activity in the margins will be the main task. As Civitas Lars Peder Nordbakken wrote in E24 (24/10): “a consistent and effective increase in the CO₂ tax and a significant improvement in the option scheme for employees in start-up and growth companies”, was the Solberg government’s most important measure for the restructuring.

At the same time, it is claimed that the most responsible use of government money – as we have learned from oil activity – is the maximum return on acceptable risk. Other financial considerations, such as system-level risk, have become less interesting. With such a limited role for the state’s business policy involvement, the conclusion is that the state’s billion-dollar investments should go almost exclusively to petroleum. Despite the Norwegian economy’s lack of diversity and concentration on raw materials.

So narrow financial axioms would not have survived long on land without Norway’s oil revenues. In Denmark, they were dependent on large imports of coal and oil for their energy supply. Since 1979, the country has therefore invested large sums in its own energy through wind power, and they also built the world’s first offshore wind farm in 1991, although it was not profitable. Today, they have 30,000 employees in the wind industry, and a market share of 40 percent for offshore wind in the EU, which means that for every gigawatt of offshore wind in the EU, there will be 9100 man-years in Denmark. For energy security reasons, they have been forced to take a more practical approach to business policy, something they are grateful for today.

To the right-wing market idealists, the state is invisible, even when it pulls in almost all the threads.

A similar pressure is located in Sweden. In order to preserve Swedish exports and an advanced industry even after the climate change, the state is investing in green industry. The state-owned company LKAB will invest 400 billion in fossil-free steel. The Swedish Pension Fund and the European Investment Bank have each invested NOK 3.3 billion in the battery company Northvolt. The state has launched 22 sector plans for the restructuring of the business sector, started the program Industriklivet to invest in green innovation for industry and given Svensk Eksportkredit a mandate to provide loans for the restructuring of the Swedish export industry.

Mind City Steinar Juel believes that “hairdressers and nurses” are the future of Norwegian working life, the Swedes and Danes are trying to position themselves to take a big piece of a growing – and green – cake. In Sweden, it is estimated that 100,000 people will have to move to northern Sweden as a result of new green industrial establishments. And they do not have as great a need for a new industrial structure as Norway.

Despite the Swedish state’s active approach, former Minister of Climate for the Conservative Party, and current CEO of the Nobel Foundation, Vidar Helgesen, claimed in an interview with Morgenbladet (29/10) that in Swedish climate policy there is «no one (who) shouts at the state». Not even that the cement company Cementa has pointed to the Solberg government’s initiative Langskip as a prerequisite for its CCS investment in Swedish cement production was worth mentioning. To the right-wing market idealists, the state is invisible, even when it pulls in almost all the threads.

All climate initiatives can not, and should not, be state-owned. The private sector has an important role to play. But today, the state phobia of right-wing economists stands in the way of effective – and in the rest of the world mainstream – climate policy.

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