- - Sunday, December 29, 2013

As a philo-Norwegian, I was disappointed by the views on Norway represented in Jerome Vitenberg’s “Norway’s shame: How a nation squandered its oil riches” (Commentary, Dec. 26).

Mr. Vitenberg begins by underestimating Norway’s oil assets by roughly $50 billion. The Government Pension Fund, commonly called the Norwegian Oil Fund, is worth $770 billion at current exchange rates, not $740 billion, as Mr. Vitenberg writes. Mr. Vitenberg arbitrarily subtracts Norway’s national debt from its oil wealth, although eliminating national debt is a macroeconomic approach favored in modern history almost solely by communist Romania.

Based on an article he read in The Economist, Mr. Vitenberg expresses concern that the price of oil will plummet after the global adoption of fracking and electric cars. Consequently, the national debt of Norway — a national debt that, a few sentences prior, Mr. Vitenberg depicted as negative — “will spiral, bringing the country close to default.”

If we think about this for a few moments, we will note two misunderstandings. First, “spiraling debt” isn’t a big deal for an effectively debt-free and indisputably filthy rich country such as Norway. If Norway’s debt load were to triple, it would bring the nation about on par with Israel. Second, no debt load, no matter how high, can cause a sovereign state to default on debts denominated in its own currency.

If Mr. Vitenberg’s vision of plentiful fracked natural gas and electric cars becomes reality, and if Norway’s entire oil savings vanish (because, according to him, risk spreading doesn’t work), then there might be a decline in the value of the Norwegian kroner. The people of Norway will groan with regret that they did not listen to Mr. Vitenberg and invest in Bitcoins.

BENJAMIN LETZLER
Munich