But funding these investments by lifting the cap on petroleum revenue spending is a certain recipe for lean times. Many of us have perhaps driven along lightly trafficked roads of a strikingly high standard. Norway is already among the countries that invests most in education, without achieving particularly impressive results. 21 Norwegian companies that want to invest in profitable projects have access to a well functioning capital market, both at home and abroad. An absolute precondition for ensuring the sound management of our oil wealth is that investments in areas such as roads, education, cultural centres, hospitals and sports centres are prioritised within the NOK 1 trillion allocated through the central government budget each year. 22 In order to maximise the return on the substantial financial wealth owned by the government today, the oil fund must be invested abroad. But this gives rise to new trade-offs between risk, return and ethical considerations. Moderate risk First, let me look at the trade-off between risk and return. How should we invest our wealth without taking on excessive risk? When the oil fund is invested in other countries that are not as commodity-dependent as Norway, our overall national wealth will become more robust to oil price fluctuations. Diversifying wealth does not of course insulate us from upturns and downturns. In autumn 2008, stock markets plummeted worldwide. There was nowhere to hide and the value of the fund fell by close to 25 per cent.

Sachs established an  30  For more on ownership strategies, see the NBIM website: http://www.nbim.no/en/Investments/ownershipstrategies/  31  For more about the UN guidelines, see “Global Compact”: http://www.unglobalcompact.org/. For more on the OECD guidelines, see: http://www.oecd.org/topic/0,3699,en_2649_37439_1_1_1_1_37439,00.html  32  South Africa received NOK 149.5 million in development assistance from Norway in 2010. See Norad website http://www.norad.no/en/tools-and-publications/norwegian-aid-statistics  BIS central bankers’ speeches  9  institute where advanced mathematical methods were applied to study the relationship between the position of the stars and the fates of human beings. 33 Collett was more down-toearth. He studied new methods of crop cultivation and was a keen supporter of the cultivation of potatoes here in South-Eastern Norway. 34 As a contributor to sustainable growth, we would have to say that Collett was closer to the mark than Sachs. Norway’s proximity to valuable natural resources has created substantial opportunities. New technology and new oil finds are still increasing the value of our oil wealth. Two North Sea fields where oil and gas were recently discovered, Galtvort (Hogwarts) and Gygrid (Hagrid), have been given names from the Norwegian version of Harry Potter. One of the books features the lucky potion Felix Felicis. This magical potion is difficult to make. The consequences can be catastrophic if the ingredients are mixed incorrectly. But if mixed correctly, the drinker will succeed in all that he undertakes. The potion also has some highly detrimental side-effects. If taken in excess, it may cause giddiness, recklessness and dangerous overconfidence.