Wednesday, May 30, 2018

Sam Galeotos: Get Your Facts Straight!

Gubernatorial candidate Sam Galeotos has earned a lot of respect and support, including an endorsement from Cynthia Lummis. My understanding is that many in the community of larger businesses in Wyoming support him. That is perfectly expectable: when you look at his credentials, he comes across as a strong candidate with the right qualifications to lead Wyoming back to prosperity. 

He may still be that same strong candidate. However, if he wants to continue to earn that reputation through the August primaries, he better make sure that he has basic facts about the Wyoming economy in place before he speaks. Here is a Facebook post on Sam Galeotos for Governor from May 17 (thanks for tip from a blog reader!):

The problem is that energy, tourism and agriculture are not the top three industries in Wyoming. Galeotos needs to get his facts straight if he is going to come across as a credible business-friendly gubernatorial candidate. And what about not mentioning the other industries? Is he only going to support the top three?

Let us set the record straight. Here are the contributions to our state economy (current price GDP) for 2017, courtesy of the Bureau of Economic Analysis:

Table 1
$m, current prices
Minerals           9,399
Government           6,235
Finance           5,685
Logistics           3,054
Retail           2,219
Manufacturing           2,148
Construction           2,047
Prof. svcs           1,750
Ed., health           1,747
Wholesale           1,680
Entertainm.           1,650
Utilities              906
Other svcs              630
Information              586
Agriculture              550

In other words, government is our second largest industry. However, even if we disregard that - and it is entirely fair to do so, so long as you mention it - and talk about just the private sector, there is no sight of agriculture and tourism at the top of the list. Minerals remains in top, of course, with finance (which includes real estate and insurance) as number two, and logistics (transportation and warehousing) as number three. 

There is no industry called "tourism", and the reason for that is that the activity of touristing falls under already-established industrial categories. The closest we get to isolating tourism is "accommodation and food services" which produced economic value of $1.35 billion in 2017. That was enough to earn an 11th place, not counting government. 

With agriculture dead last, it looks like Galeotos got two out of three factoids wrong. 

But perhaps he was talking about inflation adjusted numbers? That is fine, so long as you report your data source. Alas, we go back to the Bureau of Economic Analysis. Table 2 reports GDP for Wyoming in 2017, inflation-adjusted numbers with 2009 as the base year (a technical aspect of how you isolate inflation in national accounts data):

Table 2

2017, $m fixed prices
Minerals           9,791
Government           5,234
Logistics           2,395
Retail           2,036
Manufacturing           1,725
Construction           1,617
Ed., health           1,535
Wholesale           1,482
"Tourism"           1,108
Prof. svcs              945
Utilities              859
Finance              837
Information              616
Other svcs              506
Agriculture              498
Entertainm.              261

No, still no sight of "tourism" as one of the three biggest industries. Agriculture has at least moved up one notch.

Sometimes, people think of an industry's ranking in terms of how many people they employ. Again, a perfectly legitimate metric. Those numbers are available over at the Bureau of Labor Statistics. Table 3 reports employment data for the fourth quarter of 2017:

Table 3

State and Local Government 63.0
Trade, Transportation, Utilities 52.2
Leisure and Hospitality 31.6
Retail trade 30.0
Education and Health Services 27.6
Mining 20.4
Construction 21.0
Professional and Business Services 17.3
Other Services 11.0
Manufacturing 9.6
Wholesale Trade 8.2

State and local government is our biggest industry, but let us not worry about that right now (so long as we do not forget that taxpayers pull the heaviest load when it comes to payroll headcount). Therefore, if we disregard government we end up with logistics and utilities (the BLS industry aggregation is slightly different from the BEA) in the top spot - and then, lo and behold, we have a proxy for tourism! The problem is that agriculture is not even visible on this radar screen, while mining/minerals/"energy" ends up fifth.

Again, one in three.

If Galeotos is using some other metric to rank our industries, he needs to tell us. For now, I will give him the benefit of the doubt and assume he has received ill-informed advice. I do think, namely, that he has certain qualities that could make him a good governor. However, he needs to rely on more than his CV. 

To emphasize the seriousness of this issue, this is not the first time Galeotos has gotten the industry tally wrong. Last time it happened I tried to communicate this point to his staffers and to him personally. I was hoping that by now he would have gotten the numbers right.  

I repeat my concern: despite his background, can we trust Galeotos with the governorship if he cannot get basic facts straight about our state's economy? Can we trust that if he is elected, he will not just focus on fully supporting the top three industries? 

If he is elected, and were to decide to forge ahead with substantial reforms to our state's economy, and if he did so based on erroneous numbers; then how can we be reasonably sure that he is not going to make big mistakes that end up costing us more in taxes? 

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