Varegg wrote:
*The size of Norways population has little to do with how our regulations works, if we had a much larger population the same economic principles would apply, economic caution and budget balance doesn't consider borders nor the size of a countries population.
While I agree with the rest of your post, I will have to say that the level of regulation that works in an economy changes as your population grows. It's much harder to properly regulate a large country (in terms of population).
Dividing regulatory powers between different levels of government is America's way of dealing with our size. Even though we had the foundation for this division of powers long before we were a large nation in population, this particular approach to government is optimized for a large country. This also means that we inevitably have to lean more on the principle of letting the market clear itself due to practical constraints of regulation.
Generally speaking, a small country with a highly urbanized population will have an economy that is much simpler to regulate effectively. So, if Norway grew to the population size of say... Canada... they would have to rely more on letting the market clear itself. Regulations would inevitably become more unwieldy. Also, your wealth disparity would likely increase.
Larger nations usually have higher wealth disparities, because (regardless of how well your system is designed) disparities in regional economies and government become more pronounced. Also, larger countries tend to be more culturally heterogeneous, which can also result in more wealth disparity -- depending on the areas of the world that your immigrants come from and how effectively their cultural values translate into material success.
Even a large, culturally homogeneous, and highly urbanized country with moderately low wealth disparity like Japan still cannot regulate as effectively as Norway due to corruption issues and disparities in quality of government. This ultimately results in, again, more dependence on the market itself.