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  • Norway Prices & the US “peso”

    Posted by Carl from Chicago on September 23rd, 2011 (All posts by )

    I recently took a trip to Norway. In addition to being interested in a debate about transmission lines strung high above picturesque fjords I was also astounded at how high their prices were (when converted into US dollars).

    A drink at the crappiest, “dive-iest” bar in Bergen (Norway’s 2nd largest city) will set you back $11 USD. A drink at a regular restaurant or a hotel will frequently cost you much more. Above you can see one glass of wine and one beer (admittedly a good pour from a local brewer) and 200 Norwegian Kroner. At current exchange rates 200 Kroner is about $35-$40 (let’s say $40, because it makes the math easier and is close enough) or each Krone is worth 20 US cents. That means that these two drinks, with tip (if you leave one, optional) costs about $40.

    Here’s another sign of how upside down it is. I saw this cool mini-bar self dispensing fridge in a friend of ours’ hotel room. The prices in the mini-bar in a Hilton were competitive with those of a regular bar! I guess at some point you reach an absolute price ceiling on alcohol and the fact that a hotel mini-bar is competitive with outside prices means that you are there.

    There are other factors at play with alcohol in particular; the government levies high taxes in order to deter consumption. The long arctic nights apparently encourage heavy drinking and if nothing else the government is compensated for your sins (it didn’t seem to do much to deter the locals from drinking, but it worked a bit for me).

    It isn’t just alcohol that is almost prohibitively expensive when you are paying with the US “peso” (or Euros – the Norwegian currency is punishingly high against everyone unless maybe you were paying in Swiss, Brazilian, Chinese, Canadian or Australian dollars). I split a “Deal Meal” in McDonalds with someone (it was 2 Quarter Pounders plus fries and one drink) because it too was around $20 USD when you did the conversion (I think it was 125 Kroner). Let’s compare that with the US…

    There are other odd indications of a currency upside down, or where the local economy has become so un-moored from the rest of the world that things are just “different”. Why not drive a 5 series BMW AS A CAB? I think our trip from the airport to downtown Bergen was something like 700 Kroner… I guess that is about $140 USD or so (we took the bus back when we returned, we can learn). So at that rate you might as well drive a 5 series BMW, which must be brought in country at a prohibitively high exchange rate, as well.

    One thing about America; apparently it is very cheap to 1) get drunk 2) buy tons of unhealthy food 3) take a cab. I had a great time in Norway by the way it was a beautiful and exceedingly well-run country with a highly educated workforce. I still don’t know how they can pay the bills, though, unless local salaries are completely outrageous.

    Cross posted at LITGM

     

    9 Responses to “Norway Prices & the US “peso””

    1. Bill Brandt Says:

      I have a friend whose family came here from Norway in the early 50s. She was saying just getting a mediocre sandwich and a drink on one of the ferry boats was $70 – and I asked her, (given all their oil wealth they are, after all, considered the “blue eyed Arabs) – “why do they have such punishing taxes”

      She said that They don’t believe people should be “rich”.

    2. Nicholas Says:

      I noticed that cars are pretty cheap in the USA compared to here (Australia); about half as much on average. European cars are just plain expensive anywhere though (except maybe Europe, relatively speaking). I can’t really see how they have enough of an advantage over, say, a Japanese car to spend 2x or more for something equivalent (and probably not as reliable). Repairs are $$$ too.

      I’m surprised Norwegians put up with it. Why not move somewhere less cold, less expensive and more free?

    3. Bill Brandt Says:

      Nicholas – admittedly it has been 25 years since I was in Oz – but I was surprised at the taxes on foreign cars – a MB 190E 4 cylinder that was $30,000 here was $80,000 there.

      Met an interesting couple in Cairns – they were millionaire farmers in what was Rhodesia – thought they should get out of there with Mugabe – the only thing the govt would let them take was their car – a RR.

      They went to Australia where the govt made them impounded it for 2 years (a rule? anyway it had to be in a warehouse) – so they were starting over at the age of 65 in a small cinderblock home.

    4. Gerry From Valpo Says:

      At what rate was Lutefisk taxed by the government in order to deter chronic Norwegian halitosis?

    5. Anonymous Says:

      My college roommate circa 1980 had lived in Norway for a while (his dad was in the oil business) and said beer was high priced even back then.

    6. Whitehall Says:

      I was in the UK a few weeks ago and I too was astondened at the relatively high prices. A short, single zone Underground ride cost 4 pounds or about $7. Here in the SF Bay Area, an equivalent distance on Bart would be $1.

      Of course, one often sees European tourist ladies here in the States loaded down with shopping bags, exclaiming “Everythingth is Zo Cheap!”

    7. Inger Bisson Says:

      Scandinavian philosophy is “profit corrupts”. This is their justification for government control, and catering to the lowest common denominator: the freeloaders. So taxes abound and there are never enough workers to pay all the govt. programs, so gasoline is very highly taxed, $8 a gallon or more, etc., including sales tax which in Norway at around 27% which includes food! Milk, bread, basic necessities. They justify high auto tax because of their public transportation so cars are taxed at 100% unless they are 50 years old or older. Then no tax. Income tax is 50% or more and the free health care is another hefty premium deducted from your paycheck. But if you’re a prisoner you live in beautiful accommodations to be rehabilitated (but no deterrent not to comit a crime if you live that well in prison) and in Denmark, if you’re a student, you are paid a salary while at University. So, the ambitious self starters live in the U.S. Those who are comfortable with the govt. making decisions for them, taking their money and spreading it around say they are fine with the system, but lots and lots of money under the carpet, Robin Hooding, exchanging a service for a service with no exchange of money, etc. And the government takes care of those they want to keep (like doctors) who aren’t supposed to earn any more than the receptionist by giving them trips and cars and a house on the beach on the side as an incentive to stay. There are more Norwegians in the U.S. where there is freedom and opportunity and only 4.5 million in Norway, less than half working to support the socialized system and they were broke in the ealy 70’s, but then discovered oil in the North Sea and that saved them and their system. As Western Europe has now discovered, finally, socialism is too expensive and it is bankrupting them. Give back control to the entrepreuners and create jobs, and lessen the size of govt. and perhaps they will get out from under their economic crisis over there. In Greece the workers cheated on everything they could on taxes as it was going to social programs they felt they should not pay for, so the taxes were not enough to pay for all the programs and now they are on the verge of bankruptcy. Socialism sounds nice and we all want to help those who are really in need, but it rewards the freeloaders too who think they are entitled, and that is why it isn’t working. Is there any system anyone can come up with that will satisfy everyone? Communism was born in countries where the class abuse was so severe that most had nothing and the rich had it all. Now the government has it all. But they also had no hope either and were very suppressed and unhappy. In this day and age we don’t need communism, we need a free market with private enterprise to create jobs and secure a strong middle class. That is the backbone of every society. There will always be the rich and the poor, but if we continue to allow a strong middle class, our country will be fine. There will always be some corruption, & no, we are not all the same, that is what makes a free society so interesting.

    8. Bill Brandt Says:

      One more thought: Scandinavia’s ridiculous cost of living even nearly 40 years ago was of a perverse benefit to me while a poor Private First Class in the Army. While touring Norway (and Denmark and Sweden) I would stay in people’s homes – they advertised in the train stations. Never stayed in a hotel.

      One of the most scenic excursions I took in Norway was on the Oslo-Bergen Railway – situated about 300 miles below the Arctic Circle we went across miles of rocky landscape that woulds remind one of the moon – and in July you would still see snow.

      I got off about halfway at a railroad stop called Visp (I think), took a little train down a mountain – 3,000 foot drop? – to a town on the end of a Fjord named Flam and stayed upstairs in a family’s home. This was before Flam was “discovered” as a tourist location. It was just a tiny hamlet at the end of a fjord.

      It was absolutely beautiful – and I can remember waking up in the light – ready to go and noticing it was 2AM.

      The fjord just 100 yards way had water as smooth as glass that reflected the sunrise and the mountains.

      I took a Ferryboat out of there – can’t remember where it went.

    9. tyouth Says:

      Apparently the Kroner is, along with the Swiss franc, a denomination that is perceived to be “safe”; that is, it will not be losing it’s value anytime soon. Therefore people are buying the SF and the K which makes them even more attractive or valuable. The central Swiss bank however has just indicated that it would create as many francs as it takes to keep the value of it’s currency steady.

      I imagine that the Swiss are more dependent upon manufacturing/selling things and Norway is not as concerned about that sort of thing.