Issues In the Wyoming Election. A Series. Issue No. 1. The Economy

In this post we don't propose economic solutions.  Indeed, while we have in the past, and will do so again in the future, this post doesn't attempt to do that. 

What this asks is the simple question, with a complicated answer, of whether the candidates running this year actually have a grasp of Wyoming's economy.

So far the evidence isn't great that they all do.  If they do, they may not be willing to really admit it in the current political climate.

Every single candidate for the Governorship of Wyoming is campaigning, extremely vaguely, on the economy.  So far, excluding Dahlin who has been nearly mute, and the exceptional example of Throne, and then excepting Galeotos a bit, they're all singing the same tune.

With that tune being basically that they'll be good for the economy.

Wyoming's economy took a beating due to a decline and oil and gas prices, and the outright collapse of the coal industry, during Governor Mead's term.  Mead had nothing to do with that.  Prices of those commodities had everything to do with that.  The economy hasn't really recovered.

So, we'd expect that to be a campaign focus, but if we break it down further what we find is that there's a general concept amongst the candidates that steers a backwards course from Matt Mead's Governorship and which basically takes the view that the extractive industries are Wyoming's bread and butter and if we only got the Federal Government out of the way, everything would be fantastic.

Let's break that down a bit further.

Probably the most defining comment from any of the right wing candidates on the economy has come from Harriet Hageman which took the view that Wyoming's economy is a three legged stool.  She stated it, but it's clear that the other right wing candidates take the same view.  Those legs are, according to this view, that the legs of the economy are the extractive industries, tourism, and agriculture.

Matt Mead's more centrist view was similar but he was of the view that we definitely needed to take the stool to the shop and add a couple of new legs. This is because he was Governor as one of the legs became wobbly, the extractive industries, and the others aren't the same length. So Governor Mead, continuing the analogy, felt that Wyoming's economy was a wobbly three legged stool with legs of unequal length.  He hoped to work on building a new stool which is why he sponsored and backed the ENDOW effort to identify areas where the economy could be improved.  That program has just gotten rolling and is just starting to work on its results.

To listen to Hageman, Freiss, and Gordon, however, all that really needs to happen is the Federal government needs to get out of the way and the extractive industries will take off like a shot.  Taking it a step further, I suppose, Dodson promises that as U.S. Senator he'll stay in front of Pacific Coast Governor's offices Occupy Wall Street style until they open up exporting Wyoming's coal to whomever wants to buy it overseas.  We need to do nothing else.  That will make the economy fine.

Is this view of the economy right?

Not really.

We'll deal more specifically with the oil and gas industry and coal industries later, but we'd note that we already have.  But a little here.

Coal is on a slide that has been going on for over a century for reasons that have everything to do with the end users switching to other fuels.  Like a lot of things, even when the end begins that doesn't mean that it sets in right away, so Wyoming's coal industry ironically peaked well after the fate of coal became obvious, but that doesn't change that.  Even most realistic industry optimist now hold the view that the current level of coal employment, which never came back to boom levels, is going to decline and the best we can hope for is that it is a slow decline.

Mead put a lot of hope into being able to isolate carbon and revive coal's futures and Wyoming has poured a lot of money into that. One thing any new Governor will have to do is to determine whether or not to continue that effort.  So far, it's shown little promise, but Wyoming has a lot of coal.  Maybe it's worth it.  More on that in a moment.

Oil and gas, has rebounded notably recently, which shows us something else.  Oil and gas are fungible products whose fortunes are nearly 100% market driven.  The popular concept in Wyoming, borne of economic desperation and now maintained due to this campaign, that government regulations significantly depress the ability to produce it is largely wrong.  Indeed, in recent months many of those regulations have been removed, and unless candidates take the view that no regulation will cause a sustaining boom, their points on this now have been proven to be incorrect.

Price controls these industries, and swings in price have lead to Wyoming's boom and bust economy.  It's a big one in Wyoming, to be sure, but unless the next Governor put a lot of regulations on the extra regulations on these industries, and they're not going to, the entire ideal that the Governor can impact production is, frankly, highly suspect at best.

So does that mean we have to accept that the economy is doomed?

It actually might.  But it is worth noting that this leg of the stool is one of at least four legs, not three.  I've dealt with that earlier as well.

Three of them are those already mentioned. The fourth is government.

All of this was discussed in our earlier magnum opus post on this topic;

The Wyoming Economy. Looking at it in a different way.

 

 Big Horn foothills. There's a reason why I've posted this here, but you'll have to slog through the post to discover why.

I thought about starting this thread just the other day.  On what must surely be a "Great Wyoming Minds Think Alike" type of day, Neil Waring, on one of his blogs (like me, he keeps more than one blog) posted this item on the same topic:

I won't seek to repeat that thread, but what I will note is that very little attention in real terms is given to thinking about agriculture or tourism.  Candidates like to be photographed wearing cowboy hats and near horses, but they don't talk at all what can be done for the agricultural sector of the economy, which is Wyoming's oldest.

A lot could be.  For one thing, Wyoming could take a page out of statutory books of state's like Iowa and restrict agricultural land ownership to individual owners who actually work directly in the field, literally and figuratively.  We'll discuss that more in a following post as well.  Or they could seek to utilize products and market then locally, and distribute them after being produced locally.  But we don't.  Indeed, the state does next to nothing for agriculture in stark contrast to the constant focus on the extractive industries.  Money, i.e., the money that 's generated in good times, has a lot to do with that. But the notable thing here is that candidates pay lip service to agriculture as a leg of the economic stool and then go on to ignore it.

The same is true of tourism.  It's just more or less ignored.

Government, on the other hand, is out right disdained. But the irony of that is that government spending, like it or not, has kept the Wyoming economy afloat, at least on a local level, in some areas.  Massive construction projects fueled with government dollars were a factor is softening the bust at least in Natrona County, and no doubt in others. 

 

Former Union Pacific Depot in Cheyenne, which came about due to a Federal government transportation program.

Indeed, Wyomingites complaint about the Federal government but are keen on Federal dollars.  If they didn't come in, we'd probably cry that this was unjust, even though it'd be getting what we asked for.  And if Cheyenne didn't redirect some money to construction projects a lot of Wyoming would be the poorer for it, in every sense.

So, the candidates who speak only about the extractive industries are ignoring the reality of Wyoming's economy.  The extractive industries bring in massive wealth, when they're going well, but when they bust it creates a corresponding massive set of problems. The industries themselves are changing and will employ fewer, at least on a per project basis, than they used to do (more on that in a future post).  Agriculture has been here since the beginning, as has, in actuality, tourism, but are ignored.

And like it or not, government spending has been a factor in Wyoming's economy since day one as well.  Trappers may have been the first European Americans to set up shop in Wyoming, but the Army, with Army bucks, was right behind them.

So, looked at realistically, Wyoming's economy is a four legged stool right now, with one that's wobbly due to the way it was manufactured.  All the focus has been on that one leg, and very little of that focus is realistic.  Candidates can promise to deregulate the oil and gas industry and coal industry but it can't really be realistically more deregulated than it currently is.  Candidates can promise to feed the Chinese coal for breakfast if they wish, but there's very little Wyoming can do, in spite of vague suggestions we'll sue Oregon or California, to open up ports to supply coal to a region that is now itself switching away from it.

In this mix we have the Endow study, which proposes to open up areas of Wyoming's economy that are not well developed.  And that can be done, it is clear.  So far Galeotos and Throne are the only ones really going in that direction. That is, basically, they propose to work to add a leg to the stool.  Maybe Freiss might look at that but his campaign platforms are so vague, it's impossible to know.  You'd think that Senatorial candidate Dodson, who keeps remaining us that he was a successful businessman, would emphasize that, but he isn't.

So what does all of this leave us with.

In reality, Wyoming's economy is a four legged stool right now, and those legs are made of:

1.  The extractive industries

2.  Agriculture

3.  Tourism

4.  Government.

No part of our economic fortunes are going to do well by ignoring that.

Beyond that, of those industries:

1.  The extractive industries are made up of the petroleum industry and the coal industries.  The petroleum industry doesn't need any help from Wyoming and to pretend that we can impact its fortunes is foolish.  The petroleum industry is global in scale and its a lot bigger deal globally than Wyoming is.  It can impact our fortunes, but we can't impact its fortunes.  It knows that.

Coal is dying and inside the field insiders acknowledge that.  Governor Mead knew it as well and was hoping to revive its fortunes through. . . government spending on studying to address its principal problems.  Maybe that will work, maybe not, but what all this leads to is this'

Candidates who promise to bring back perpetual happy days through deregulation are backing a concept that won't work and in the current Administration is actually counter to the reality on the ground.  

2.  Agriculture has its own boom and bust problems bu the state has just flat out ignored it for years.  The current candidates are going to as well.  It may be at least worth asking if they have any ideas here, as based on their campaign's lack of attention, they don't.

It'd be worth noting here that agriculture remains one of the industries that is an American export industry.  However our Republican president threatens to harm this sector of our economy with a trade war. What do the candidates, particularly the Republican candidates, think of this and why are they so silent on this?

4. Tourism.  None of the current candidates are vocal on this and perhaps there's no reason to be.  Or maybe there is.  Two of the current candidates are sort of just long staying tourist in the view of natives anyhow. That's relevant in that one thing that's rampant in the tourism industry is underpaying the help.  Underpaying people is, of course, a Democratic issue, but we're not hearing things much there either.  While we'll also look at this topic later, why is it that the candidates don't discuss anything about the tourism industry, where the workers are often underpaid, where jobs actually exist on a continual basis, and which is generally under taxed.

5.  Government.  Everyone like to pick on the government, but with out Federal DOT dollars, Federal money spent on the public lands (which Wyoming doesn't have to spend), the USFWS, the Forest Service, the BLM, and the United States Air Force (yes, the military is part of the government) our economy would be a lot worse off than it current is.  

On top of it, it's clear that in order to address some of the systemic problems with Wyoming's economy, government spending on the state level is going to be necessary.  Transportation is one such area, including air transportation.  I suspect that in the near future we'll find this to also be the case for rail transportation.   Education is an obvious area where this is true, and every candidate claims he wants Wyoming's educational system to be first rate even though that cost government money.

Why do the hard right candidates, or generally the candidates in general, so despise a sector of our economy that's actually there and what is it that the government is supposedly doing to us that's so mean?  More on that later as well.

6.  The new leg.  Mead has clearly been trying to diversify Wyoming's economy.  Galeotos and Throne have this as centerpieces of their campaigns.  Galeotos is a conservative on social issues and seems to be the only Republican candidate who actually grasps that this is going to be necessary if Wyoming isn't going to have a 19th  Century economy in the 21st Century world.  So far, his plans are vague, but at least they aren't lashed to a pre Mead view of the economy that's failed before.  Throne is also focusing on this.  Her views on social issues are presently unknown, at least to me.

So there we have it.  The economy is a central feature of every candidates campaign, but to listen to most of them its the mid 1970s and Jimmy Carter is in the White House imposing regulations on everything.  Those days are gone.  Of the current candidates, none of them are willing to speak about the role of the government in Wyoming's economy, and only Galeotos and Throne seem to share what Mead acknowledged, that we have to develop a broader economic base.

On a final  note, it's up to the electorate to be educated.  When candidates come around and say things, it's worth pinning them down.  This year, when they or their supporters show up, I frankly intend to.

Related Posts:

Issues in the Wyoming Election. A Series