How to beat the resource curse in Norway (Summer School)

0:00This is Planet Money from NPR.

0:14Welcome back, everybody, to Planet Money Summer School World Tour, the only international economics degree you can get while driving on the wrong side of the road. Or is it the right side? Hmm. I'm Robert Smith. Every Wednesday until Labor Day, we are living out of a suitcase and jutting to the seven continents of this earth. In each country, we'll hear stories of how other people have tackled some of the same economic problems we face here at home, and we'll collect solutions we might not have considered.

0:45It's like a cheap souvenir that can improve everyone's life instead of just gathering dust on your bookshelf. Today, we visit Europe and tour one of the countries that is actually richer per person than the United States of America. Norway has won the economic lottery, and it's managed those riches better than just about any country on Earth. Every class at summer school has a local expert to guide us around. And today in Norway, we have Hilda Bjornlund, a professor of economics at the Norwegian Business School.

1:20Hey, professor. Hi, Robert. You can call me Hilda. Okay, Hilda. Norway and really all of Scandinavia, when you think about it, are often held up as this model of how a wealthy society can create this wonderful quality of life. I know it looks idyllic from the outside, but there must be some challenges in your economy that we don't normally talk about. There's a lot for us to learn from other countries. So one thing is that there is a lot to strive for in terms of, if I should be a little bit more critical in the sense of entrepreneurship, productivity, and these days technology and AI, we are not the leaders there.

2:04So in that sense, we are safe and sound with a lot of richness and social welfare, but maybe we are not the leaders in inventing things at the moment. Well, it is notable that Norway is only one of a handful of countries in the entire world that has a wealth tax. Most countries tax income, but Norway actually taxes your investments and your houses and your assets that you own every single year. Does this maybe slow down the competitive spirit to start an internet or an AI company?

2:36I think it's part of the problem. And I think for sure, most economies in Norway think it is preventing the kind of investment we would like to have. So it has been suggested to reduce it and it's being discussed at the moment. But for now, it's clearly not working in the favor of new investment. Well, I could tell you as a country that has both new investment and a brand new trillionaire, there is more discussion here about perhaps having a wealth tax. Yeah.

3:06So there's other taxes you can also impose like inheritance tax and house tax separately. And you can also do higher income tax. But we have had most of them. So that makes for less incentive, it's said. There is also, as we will see today in one of our case studies, the subject of the oil. Norway is one of the top oil producers in the world, the biggest in Europe. And that's led to these riches that I mentioned at the beginning of the show. So the money has been amazing for Norway. But is it possible to be too rich, to have too much money?

3:40I'm not sure whether we have too much. But if you have a lot, the politician might not necessarily prioritize the right thing. There will be a lot of pressure on them to spend it on a lot of things. You build roads to small islands without thinking on that you have to maintenance all those roads in the future, which might not necessarily make the Norwegian economy more productive and more sustainable in the future.

4:07So how does a country stay productive and sustainable after the discovery of oil and massive riches that pour into the economy? We will tackle that question with Hilda and tell you a parable about the economic value of restraint. When it comes to governments, or frankly, our own lives, the key to long-term wealth is to resist the short-term urges. After the break. This message comes from Workday.

4:42Guessing is for game shows, not your business. Especially when your margin for error is zero. Workday is the enterprise AI platform for HR, finance, and IT, with a deep understanding of your organization's context and guardrails. So every AI action is permission-aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right. It's a new Workday. This message comes from Instacart. Instacart makes grocery shopping easier, and just because you're not doing the shopping yourself doesn't mean you don't care how it's done.

5:17With Instacart Shopper Notes, you can add details about what you want right in the app, like extra crispy rotisserie chicken or lettuce you'd pick yourself. Just leave a note so your shopper can get it right without having to ask. Download the Instacart app and shop today. Welcome back, class. Eyes up. Pencils ready. Because our first case study is a classic one in international economics with a new twist. When a country discovers a valuable resource like oil, they pop the champagne bottles, they buy new Cadillacs,

5:50and then they watch in horror as their economy gets worse. The oil corrupts officials, distorts the real economic activity like manufacturing and agriculture. It's called the resource curse, and we've covered it before on Planet Money. But Norway found a secret talisman to break the back of the resource curse. Professor Hilden, remind us of the definition. Okay, so a resource curse is a strange fact that a country who finds, say, oil or gas or any natural resource,

6:21it ends up being poorer after it has extracted the resource than it was before. So it's a curse, actually, to find the resource rather than a blessing. It's amazing. It's like winning the lottery can make you poorer. Yes, exactly. It's like a paradox of plenty, we call it. The paradox of plenty. Oh, I love it. So, how did Norway succeed in becoming a rich and successful oil-producing country where so many others have failed? Our first case study is from 2011.

6:53It was hosted by the great David Kestenbaum and Alex Bloomberg. The story of how Norway avoided the oil curse is a fascinating tale focused on one guy, one unusual man, who was instrumental in helping Norway get it right, where so many countries get it wrong. My name is Farouk Al-Khasim. Farouk Al-Khasim is Iraqi, and for over a decade, he worked in Iraq for an oil company. He was trained as a geologist. Farouk's wife was Norwegian, and in the 1960s, they decided to move to Norway. Their son had cerebral palsy and needed medical care.

7:25Job-wise, Norway seemed at the time like the worst place in the world for an oil guy. You see, the Norwegian Geological Survey had already said that there is no hope in heaven of ever finding oil or gas. So Farouk figured if he was going to get an oil job, it would come with a very long commute. If I am lucky, I could get a job in Europe somewhere, or even in North Africa or the Middle East, and then I could commute to Norway.

7:58If the worst comes to the worst, I may be able to drive a taxi in Norway. That's what I was thinking. So Farouk flew to Norway. He had to catch a train, but he had six hours to kill before the train left. And those six hours turned out to be very fateful for Farouk and for Norway. Instead of waiting around in the train station, Farouk decided, I'll spend my time productively. I looked into the telephone directory and decided that the Ministry of Industry is the ministry to deal with oil, if there were oil at all in the country.

8:31So I went there. So you just took a cab from... Not even a cab. I walked. Oslo is not all that big. Farouk knew that there were some companies looking for oil in Norway, despite what the Norwegian Geological Service had said. And he was hoping to get a list from the ministry of these companies. He assumed they'd just write some names down on a piece of paper and send them back to the train station. But instead, they sit him down and they start asking him all these questions. I thought it was just social curiosity. But what Farouk didn't know at the time, Norway isn't just an overly friendly society.

9:03It turns out that group of people in that office had been waiting for a guy like him to walk in the door for a while. See, even though Norway's geologists had said there wasn't oil, there were still oil companies exploring. And these oil companies were sending the results of their exploration to the government. Now, Norway's a small country, and there aren't a lot of people who can make sense of that data the oil companies were sending. And so then this Iraqi guy walks in and says, I'm here. Is anyone still looking for oil? So what do they do? They hired him. And his first job, first job they gave him was they asked him to look over the geological results from the oil companies that had been doing test drillings.

9:38The terrain in Norway could not be more different, right? Farouk has gone from the deserts of Iraq to almost the Arctic Circle. The oceans are violent and freezing cold. But, you know, geology is geology. And to him, looking at the drilling reports, they look surprisingly promising. The oil companies had found oil. Not a lot, but there was definitely something there under the ocean floor. Remember, the country was saying, there's no way there's oil out there. And here I am looking at data that says, my God, they have already found it four times over.

10:10Admittedly, and not yet commercial size. And by the way, you know, most oil companies, when they go to a new area, they are not really interested in what I call the foxes and the rabbits and the mice. They are interested in elephants. Right.

10:31So they had a couple of foxes and mice that was in the data, but it wasn't clear there was an elephant there. They were looking for elephants. But if you are a good geologist, you should appreciate very quickly that it's too early. The elephants will be there. It's just a question of giving them a little bit of time to learn how to find elephants. And they will be shooting not only one, but maybe 20 elephants. So Farouk's job is to take all this data and write a report.

11:02And what he says in this report is two things, basically. One, I know your official geological survey said there's no oil. Turns out that's not true. And two, in fact, there's probably a lot. And you, Norway, have to get ready so you don't suffer from the oil curse. Norway has no time to waste preparing themselves for the oil era. And of course, you know, they looked at the report and they said, oh, do you really see that? Oh, my God. We'll just have to wait and see. All the warnings, I was a little bit desperate in trying to find, well, how do I go about persuading them that they really must start preparing themselves?

11:46Farouk's job of persuading them got a lot easier pretty quickly because shortly after he wrote that report, in 1969, people discovered the elephant, the Ecofisk oil field. A massive reservoir, which even today, just this one field produces almost 300,000 barrels of oil a day. So clearly, Norway had a situation. They had a lot of oil and they had this guy from Iraq saying, you have to be very, very careful how you handle it. So let's just pause here and lay out why finding what is essentially a pot of gold is considered by economists to be a curse.

12:18The first reason is just that it corrupts. It's human nature when something very valuable is discovered. Fights tend to break out over it. A lot of times you get dictators who keep all the money for themselves and use it to keep themselves in power. But there is a second problem with discovering massive amounts of oil, and it's less human nature, more mathematics. It's sometimes called Dutch disease after what happened in the Netherlands when they found a bunch of natural gas. And it goes like this. All of a sudden, you have this commodity which the whole world wants to buy from you. Money floods into your economy, which makes your currency more valuable.

12:49After all, if someone wants to buy oil from Norway, they have to pay for it in the Norwegian currency, the krona. Before Ecofisk, not much of the world cared about having a lot of Norwegian krona. But now, everyone wants it. And as we've talked about before on this podcast, when your currency gets more valuable, that's actually a tough thing for a lot of local industries. I mean, take, for example, the Norwegian fishing industry, right? All of a sudden, now, Norway's cod is going to be way more expensive than cod from other countries that haven't discovered oil. And so when you discover oil, what can happen is that other sectors of your economy shrink or even die.

13:24And that was the fate that awaited Norway. Corruption, collapsing industries, a possible descent into tyranny. So they asked Farouk, what do you think we should do? And he and a colleague sat down to write their recommendations, recommendations for how Norway should deal with its extremely dangerous newfound wealth. They had one week to do it. Farouk and his colleague needed a quiet place to think. So they set up for a cabinet in the woods that his colleague had. We have food. We have beds. We have everything. Fishing rods. You know, we could work as hard as we like.

13:54And then when we are tired, we could relax. And actually, we, instead of using the whole week, we did it in four and a half days. It was a first draft of a white paper, a white paper that got passed up to various officials in the Norwegian government, reviewed and eventually incorporated into a finance ministry plan that ended up saving Norway from the resource curse. Now, Farouk wants to make it clear. He was one of many people that contributed to this plan. But what emerged was pretty great. The plan set up a powerful independent regulator that made sure all the companies in Norway played by the same rules,

14:28that there weren't any sweetheart deals, that they paid their fair share in taxes to the Norwegian government. But that still left the Dutch disease problem. Selling all that oil would flood the country with money and drive up the value of the currency. So the solution? Let's not make so much money. Let's not drill everything at once. So what they advocated, that we should be very restrictive in how many licensed blocks we allocate per year. And as a result of that, throughout the 70s, no more than three, four blocks were allocated every year.

14:59That shows amazing self-restraint. We have all this oil on the ground, but we're only going to tap a bit every year. It is a fantastic self-restraint. The whole nation didn't even question this. Now, when this white paper of 1974 came out, it was received with skepticism by the industry, who wanted Norway to go full speed ahead. But at the end of the day, when the debate settled, the opinion of the politicians was very clear.

15:32We should go slowly. So, Dave, let's just pause here to marvel at what the Norwegians did here. They essentially had this gigantic pile of money buried beneath the ground. And they said, you know what? We're not going to dig it all up at once. In fact, we're going to dig it up really, really slowly. Just a little bit a year for decades. They reinvested almost all the money back into developing the oil industry, into drilling new wells, doing new explorations, developing new technologies. Remember, Norway's oil was really hard to get. It was far beneath the ocean floor in cold, stormy seas with these crazy cross currents.

16:06The technology to get it out of the ground barely existed at the time the discovery was made. So there was a lot of R&D to invest in to actually get it. And even later, in the 1990s, when a lot of those problems had been solved, the government still did not spend the money it got from oil. Instead, put it into a fund. We learned of this story from an article Martin Sandbu wrote. He's an editorial writer at the Financial Times. He's from Norway. It's been saved in an oil fund, a savings fund. And the government only gets the interest on the financial wealth that's in that fund.

16:37Your country basically has a huge trust fund, a huge endowment. A huge trust fund. A trust fund is, I haven't checked the latest numbers, but it's on the order of $500 billion now. Which amounts to $100,000 per Norwegian citizen. It's pretty nice. It's quite nice. Our case study on the oil curse first aired in 2011. A lot of oil has flowed from the North Sea since then. Professor Hilde Bjornlund, let's update the numbers in that story. There is more money in the oil fund now, I would imagine.

17:08Oh, yes. Yes, for sure. How much money does Norway have? Okay, so I actually had to check the numbers. And these days, the fund now is $2.3 trillion. $2.3 trillion. Trillion. So there's a lot of zeros after the two point there. And if you take those $2.3 trillion and divide it by 5.5 million Norwegians, you get $400,000 for every Norwegian.

17:44Why go to work today, Hilde? Why should anyone do anything in Norway except spend that money? Yeah, that's a good point. But the reason being that we can't spend it all now because we are saving for the future. We are still saving for the future, but we are spending a big chunk of that every year still. Well, the case study was all about the money. But there is something else that Norway got out of this whole process, and that is expertise. There are now Norwegian drilling engineers, Norwegian drilling companies, Norwegian subsea robots, a whole Norwegian high-tech petroleum industry that you didn't have before.

18:24So this is super important, and that's often something which isn't part of the story. If you think of a typically oil-producing country, think of a small open economy with no knowledge like we had in the 70s. And the U.S. comes in with these big companies, they drill, and they have all the expertise, and the proceeds go to the government, who spends it widely. Then you're bound to get some resource curse. But what we did was that we taxed these oil companies. We decided to tax them a lot, 78%, for drilling in the North Sea.

18:59And that, together with the know-how and the spillovers and the engineers and the technical competence, made us not just producers, but it made us capable of having industries which then, again, could come and export and to drill and to extract and invent in other countries. So this all seems like a good pitch to do things Norway-style, or I guess we should say Farouk-style. But I do wonder if listening to this case study would actually help a country if they discovered oil.

19:32It seems like you have to have a lot of political and economic things in place before the oil starts pumping. So Norway was already a democracy when it discovered oil, which was also true of Canada and the U.S., who avoided the curse. You have to have a good financial tax system in place. And economists talk about the high level of social trust in places like Norway. What does that look like in the country? So first of all, I think most Norwegians trust the government, the parliament, the lawyers, the high court.

20:07Let me write that down. You trust the lawyers. This is a new concept for me. Well, let me say I trust the high court in a sense. I don't trust all the lawyers. So like at the time, I think people trusted the government for making the best decision for the Norwegian economy. That doesn't mean that you have to agree on all decisions which are made. There's a lively debate in Norway these days about spending too much public money relative to using the money on, say, reducing taxes.

20:38It's a political decision. Should we reduce taxes and then maybe spend less on the social welfare system? That's a debate. I've always wanted to ask a Norwegian this. Your riches come from oil, but most of the cars sold in your country are electric cars. I read something like that 96%, could this be true? 96% of new car registrations are electric cars? Absolutely true. From an oil superpower? Do you have an electric car?

21:09Yes, I do now. And I love it. So it's fantastic. But the thing is, here they gave a huge tax incentive. So this is maybe a tax incentive which worked in the beginning, but then the price of an electric car went down. So then it became quite an excessive subsidy towards electrical cars. I love it. Electric car subsidies that come from oil. That is definitely one way to do it. We will return with the professor after the break and another clever Norwegian lesson.

21:40How to turn something you're about to throw away into profit. All it takes is a cartoon Viking, a boatload of salmon sushi, and the willingness to break a cultural taboo. After the break.

22:02This message comes from Workday, the enterprise AI platform with a deep understanding of your organization's context and guardrails. So every AI action is permission aware, giving you the ability to get work done right. It's a new work day. On NPR's Wildcard podcast, musician Rishikesh Hirwe tries to remind himself how miraculous it is that we're alive at all. Like, that's unbelievable. Everything is unbelievable. We should all be walking around all the time saying, oh my god, I can't believe that any of this is happening.

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23:05We are back enjoying the bounties of Norway, sweet, sweet crude oil, and now delicious salmon. Both are Norwegian, both abundant, but there was too much demand for the oil, as we saw in the last story, and not enough demand for the salmon, which is the topic of our next case study. Kind of a sushi curse, if you will. Professor Hilde Björnland, I take it everyone eats salmon in Norway? Oh yes, all the time. Raw and cooked and fried, barbecued.

23:37And anything else you can think of. Okay, before we hear this case study about salmon, what should the students keep in mind as they listen to it? So the students should think about what are the barriers to trade? What could prevent industries from entering into trade with another country? And I think also they should think about the market alone is not always enough. Interesting. People should pay attention to what the government does in this story, and how it does what the market can't do.

24:08This case study came from 2015. Our hosts are Jess Zhang and Jacob Goldstein, and the story starts in Manhattan. I've been going to sushi bars since I was a little kid, but in all that time, I've never been on the other side of the sushi bar. I've never been back where the chef stands. Last week, we made it back there, thanks to chef Shimao Ishikawa at the sushi restaurant Jewel Bako in Manhattan. What's the most popular fish you sell? Popular fish? Tuna is popular.

24:39Tuna. They've got lots of tuna. And then the second most popular? He's been a sushi chef for 40 years or so. And, you know, as you'd expect, he has served and eaten basically everything. Sea urchin? Of course he's eaten sea urchin. Poisonous blowfish? Sure, he's got a special license in Japan to prepare poisonous blowfish. But in all his years as a sushi chef, he's never, ever had a single bite of raw salmon.

25:09I'm not eating salmon, no. Wait, never? Yeah. I never eat salmon, you know. So you've never even taken one bite of raw salmon? No.

25:25Can we get you to try it today?

25:28Tomorrow. Banana.

25:32Not that long ago, everybody in Japan was like Ishikawa. Nobody ate raw salmon. It was like eating raw pork or something. It just wasn't done. When we talk about international trade, you know, we often tend to talk about things like tariffs and quotas. And there's this idea that if you get rid of those things, get rid of those barriers, then new products just come rushing in across borders. But clearly, that is not always the case. I mean, sometimes you have to spend years and years and years working and begging and trying to convince an entire country that whatever thing you have a lot of, whatever thing you want to sell, is something they should want to buy.

26:12Like, take, for example, salmon in Norway. Hello?

26:18Hello, can you hear us? The other day, we were trying to connect to this studio in Trumpset, on this little island in northern Norway. And we overheard them talking about us in Norwegian. For a publicum, not economy and so on the market. Money, money, planet. Yeah, yeah, yeah. Hello? Hello. Does planet money translate as money, planet? Is that right? Yeah, yes, yes, yes. This is Bjorn Edek Olsson. And when we talked to him the other day, he told us that back around the time he graduated from college, this was a few decades ago, Norway had a problem.

26:54The government had been subsidizing the Norwegian fishing industry for decades. And basically, they'd been paying people to fish. And, of course, when you subsidize something, you get more of it. It's not a very clever way of using money because the more you use, the worse the situation gets. The government says, OK, let's wind down these subsidies. But we're not going to screw over our fishing industry. Let's figure out a way to get the rest of the world to buy our fish.

27:25They look around the world and they see one country in particular that really loves fish and that needs to start importing more fish. Yes, Japan. At the time, salmon sushi is not a thing. Not in Japan. Not in Norway. Sure, it's cured or smoked. But a hunk of raw salmon? No. And, in fact, the idea of salmon sushi just began as this tiny little thing at the Norwegian embassy in Tokyo. They were just playing around with ways to serve Norwegian products in a Japanese style.

27:56They just tried, let's try to have a little bit salmon raw. Just in the embassy, try that. And the chef and the ambassador said, this tastes quite nice. Around this time, Bjorn gets hired by the Norwegian government to sell fish to the Japanese. He used to be a fisherman. He speaks Japanese. He's kind of the perfect guy for this mission. And he figures, yeah, sure, we could sell salmon cheap in Japan. People in Japan already eat salmon grilled. But when people buy fish to use for sushi, they're willing to pay a lot more for it.

28:30Sometimes people pay five times as much for the same kind of fish if it's going to be used for sushi. So if he can get people in Japan to eat salmon sushi, it'll make all that Norwegian salmon much more valuable. So Bjorn goes to Tokyo, and he gets a bunch of Japanese fish industry executives into a conference room. And he unveils the next big thing, salmon sushi. And they say directly over the table, it's impossible. We Japanese do not eat salmon raw. And we say, well, yes, but it's good.

29:02It tastes good. And now they say it doesn't taste good. They say the color is wrong also. It's too light red. It should be redder. And they say it has a smell. And also, of course, they knew the shape of the salmon. And they said that the head has the wrong shape. And the gills look wrong. Everything is wrong. So everything was wrong. Everything, the taste, the smell, the texture, the fat, the color, everything. Bjorn's big challenge was this. He was going to have to change the perception of an entire country of people, people who thought the color or the shape of the head of salmon was all wrong.

29:39And if you want to change perception, if you want to get people to buy something, what you do is not a mystery. You launch an ad campaign. And so Bjorn and his colleagues figured, all right, we'll start doing some TV commercials. Made me have a cute cartoon character. Did you have a mascot, like a dancing salmon or something? We had, but it was very silly. It was a Viking. A Viking? Yes, yes. It was a Viking with a helmet. And it was like a funny drawing with a big head. And it said Norwegian seafood.

30:10He actually sent us a picture of the Viking of the mascot. And I have to say, it's like if you were to imagine what some outsider trying to pander to a Japanese audience would come up with, it's kind of that, right? Like it's this super cute little boy Viking with this great big head and like big eyes. And a huge giant fork. Yeah, like as tall as he is. And so the Viking, surprise, didn't work. People in Japan were used to eating this kind of salmon that tended to have parasites in it and would make you sick if you ate it raw.

30:41Bjorn says the salmon from Norway was totally different. Parasites just weren't a problem. But it's not like Bjorn could just run an ad in Japan that said, don't worry, our salmon is parasite free. We concentrated our information to the consumers about the cold, pure Norwegian seawater. And of course, putting the pictures of fjords, mountains, ice. Then you gave the impression about something that is pure and fresh. Pure and fresh, not enough to get Japan to start eating raw salmon.

31:16And back in Norway, the Norwegian salmon industry was getting desperate. The glut was getting so bad that they start filling industrial-sized freezers with tons and tons of salmon. So Bjorn is trying to find somebody in Japan to buy into his dream of Japanese people eating raw salmon. And there was this one company called Nishirei that he had been building a relationship with for years. Everybody in Japan knows this company. They're like Kraft or Stouffers or something in this country. They sell frozen food, you know, dumplings, chicken nuggets, squid.

31:49Bjorn told them, I will sell you 5,000 tons of that frozen salmon for really cheap. All you have to do is sell it in the grocery stores as sushi. Just try it. Nishirei said, yes. Bjorn had a deal. It was a day of happiness. I remember that. And it was like, I mean, being in the heaven, if you see what I mean. Just the happiness, I mean, that was shared. Once Nishirei starts selling salmon for sushi, the idea of salmon sushi just seems more normal somehow.

32:21It would be like if, I don't know, if in this country, say, Danon started selling yogurt with raw pork at the bottom. Oh, God. I mean, you know, look, think about it this way. Like, I look at it and think, OK, definitely not something I would have come up with. But I've been eating Danon yogurt all my life. Never made me sick or anything. So, you know, whatever. Maybe I'll just throw one pork at the bottom in along with my strawberry banana in my shopping cart. Pretty soon, salmon sushi starts showing up everywhere in Japan, especially in those conveyor belt sushi restaurants, those kind of mid-tier apple peas of Japan.

32:55Almost everybody is trying raw salmon. Tadashi Ono is a sushi chef. He's 53 now. The first time he tasted salmon sushi, it was about 20 years ago. And it did not go well. I was scared. Yeah, so I couldn't really enjoy it. I wasn't really clear about how it tastes. I was more thinking about, oh, my God, am I going to get sick or what? But, you know, second time, maybe. Third time, OK. You know. So, you know, I started liking it. It's actually, you know, buttery.

33:27It's creamy, melt in your mouth. It's creamy and it melts in your mouth, is it? Yeah, it is, in a way.

33:35That story was from 2015, hosted by Jacob Goldstein and Jess Chang. A small update to the story. In a recent survey of Japanese consumers, 59% preferred to eat their salmon raw while dining out. That data is from the Norwegian Seafood Council. Keep on selling, my friends. After the break, our professor returns with advice for countries that don't necessarily have oil or oily fish. The real Norwegian lesson is how to solve a coordination problem and sell an image.

34:10Coming up. This message comes from Workday. Guessing is for game shows, not your business. Especially when your margin for error is zero. Workday is the enterprise AI platform for HR, finance, and IT with a deep understanding of your organization's context and guardrails. So every AI action is permission aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right.

34:41It's a new Workday. And we are back from the break and here with some final lessons from Norway and the salmon solution. Hilda Bjornland is our professor. Hey, professor. Hi, Robert. Thanks for having me here. What I found interesting with this story is that one company could not have done this alone. It required all the companies and the government together to market not just one company's salmon, but Norwegian salmon as a whole brand. So why was that important? I think it was important for two reasons.

35:13One reason was, of course, that together they were stronger and there was no incentives to free ride. Why don't you define free rider for us? That's a good economic term. Okay. So free rider is, so let's say I'm a company and I do all the hard work and I sell for a lower price and I invest and I go there and I advertise and I use a lot of resource on this. Then eventually I manage to convince Japanese people to eat raw salmon. Then all the other companies in Norway, salmon companies who haven't been putting money and resources into this, suddenly have a free access to the same market because I have opened the door for them.

35:56So free riding would be that they would sail on my success in a way. This is a kind of coordination problem that requires a government to come in. Exactly. A coordination problem. Exactly. And the government here opened the doors for them. We couldn't just advertise one company. We needed to advertise the Norwegian salmon as a brand. And for that, they needed to come together. Well, I would argue it was more than just Norwegian salmon. They were selling Norway. And we've seen this with countries around the world, right?

36:28This sort of soft power that people talk about. South Korea sells its entire culture as a sort of cutting edge, cool thing, and that benefits all their companies. France has sold their high gourmet standards. This was an opportunity for Norway to develop a brand, really, that you are pure nature, quality. I don't know if that existed beforehand. You're absolutely right. We heard about the Vikings, trying to brand it through the Viking.

36:58And we see the Viking today in the world champion in the football. This is really the brand Norway we were selling. Maybe we will have more tourists coming to Norway from this. Maybe you could sell those plastic hats with the horns on them. I know they're very popular. Nobody wants that. Nobody wants that. They're probably made in China anyway. They are made in China, for sure. Hilda, one thing we are asking of every professor this season from countries around the world is, if there's one thing we could take, one lesson we could take from Norwegian economics to implement here in the United States,

37:30what should we do? And you cannot answer, get lucky and find more oil. It's not about the luck, but it's what you do with the luck. So we were lucky, of course, who found oil. But that's not the real reason we are lucky. We are lucky because we managed the wealth in a good way. I think the winners, the big winners in Norway from finding this oil is like the people, everybody. Because we have a society where the income distribution is compressed, we say.

38:01That is not a big difference between the people. And I think that's partly to do with the fact that we found this huge wealth and we have redistributed it. So we have everybody are winners in a way. It can be improved on, but I think that's a lesson for the U.S. to think in those directions. We do have a lot of work to do. Hilda, before you leave, I wanted to remind students of two of the big concepts we covered in this class. There is an online test at the end of the summer. Everyone should prepare. And you don't want to flub the questions on the resource curse, also known as the oil curse or the Dutch disease.

38:39The resource curse, it's the fact when a country who is lucky and finds oil or gas or any resource, it ends up poorer than before it found it. That's the resource curse. Of course, we went over ways to prepare for the resource curse. One big one is to develop social trust. First, I'll do the definition. It is the belief that other members of a society are basically honest, fair, and reliable.

39:10Yes, even the lawyers. Please don't write us. And Hilda, you mentioned the term free rider. I'm going to use it in a sentence. I am free riding on your brilliance in this interview. Well, I'm free riding on this discussion. I'm enjoying it. All right. Free riders all around.

39:32Our professor today is Hilda Bjornland from the BI Norwegian Business School. Thank you so much for coming in. Thank you for having me, Robert. If you'd like to know more about clever ways to profit from an oversupply, the new Planet Money book has a great chapter on raisins. Page 32. They're just worthless dehydrated grapes. Hate to break the news to you. Until you figure out how to brand them. That's Planet Money, a guide to the economic forces that shape your life. We're starting to get your emails about clever economic tricks from around the world.

40:04How about this one? In Taiwan, every receipt for a commercial transaction is also a lottery ticket. Every couple of months, the government gives away money to people with lucky receipts. It keeps businesses from selling things under the table and avoiding sales tax. Very, very good. Send your ideas you've seen around the world to planetmoney at npr.org. Put summer school in the subject. We'll celebrate the best ones in our graduation episode at the end of the series. Summer School is produced by Sofia Polisakar and edited by Alex Goldmark.

40:37It is fact-checked by Sierra Juarez. This show is engineered by Sina Lafredo with help from Anli Huang and Robert Rodriguez. I'm Robert Smith. When I'm not summer schooling, I am talking about business history on the new podcast, Business History, which is a show about the history of business. This is NPR. Thanks for listening.

40:57Ladies and gentlemen, a reminder, no running in the terminal. Don't worry, you'll have plenty of time to get to your Planet Money flight to the Caribbean. We'll be heading over there to ask a radical question. Does property have to be private? Take off as usual next Wednesday. This message comes from Mint Mobile. If you're tired of spending hundreds on big wireless bills, bogus fees, and free perks, Mint Mobile is for you.

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41:59This is Tanya Mosley, co-host of Fresh Air. Don't miss my interview with writer Gia Tolentino. We talk about plastic surgery and how current beauty standards are changing our relationship to reality. It seems more explicitly anti-human right now than ever before. There seemed to be something that's dovetailing with the age of AI. Listen to Fresh Air on the NPR app or wherever you get your podcasts.