The editors of the Chicago Tribuen caution Illinois’s legislators about the distinctively vulnerable position Illinois has placed itself in:

We aren’t here to argue that Illinois should be the 29th right-to-work state. We’re here instead to warn that while Illinois lawmakers deadlock on policy reforms that would attract more jobs here, including reforms struggling to get support in the Senate, the six surrounding states have positioned themselves to attract more jobs there, there, there, there, there and there.

When will Illinois lawmakers recognize that the house is on fire? When will they make job creation, job retention, their do-or-die priority?

With Democrats controlling the House and Senate, and even Republican lawmakers in the General Assembly preferring to duck the issue, Illinois won’t be a right-to-work state any time soon. One community that tried on its own, Lincolnshire, had its right-to-work ordinance struck down by a federal judge.

But right-to-work laws in every border state are all the more reason for Illinois to make itself attractive to employers. We agree with Illinois Chamber of Commerce President Todd Maisch that if lawmakers won’t even debate right-to-work legislation, they have to get behind other pro-growth policies — tougher workers’ compensation laws, tax credits to encourage businesses to locate or expand here, fewer nanny-state regulations and schools that better prepare students for the workforce.

“Right-to-work” laws are laws which under the Wagner Act can only be enacted at the state level, not the local level, which ban the “closed shop”—employers for whom membership in a union is a condition of employment. They are widely seen as anti-union. All of the states adjoining Illinois—Indiana, Kentucky, Missouri, Iowa, and Wisconsin—now have right-to-work laws.

That isn’t Illinois’s only competitive disadvantage. Illinois has more pervasive regulations on business, higher taxes, worse political corruption, and, as I have previously pointed out, a higher minimum wage than any other state. Its state government is obviously dysfunctional. It was the third worst return on tax dollars sent to the federal government of any state.

Even when the President of the United States was notionally at least an Illinoisan and one of its senators was Assistant Senate Minority Leader it couldn’t attract more federal spending to Illinois. “Bringing home the bacon” simply doesn’t apply to Illinois.

Illinois population centers tend to be located on its borders with other states which means that in some place you only need to walk across the street to be in another state.

Illinois will need to exert some pretty strenuous efforts to attract businesses to the state. Attracting a few big, showy businesses to Illinois is nice but it doesn’t make up for the thousand of smaller businesses that are leaving. And our feckless legislators can’t even enact a budget.

When someone bets more than they can afford on the lottery, it can hurt their family. They may not be able to buy food or clothing for their children or pay their rent. It’s a terrible situation.

Generally speaking, as a society we have decided not to indemnify them against their losses. The reasons include something the insurance companies call “moral hazard”. If we indemnify against their losses, we believe it will encourage them to wager more.

There are lots and lots of things that many people do not recognize are gambling but are. For example, every time someone commits a crime they are taking the risk of being apprehended and punished for it. It’s actually a pretty good gamble. In the United States clearance rates (the number of charges filed divided by the number of crimes reported) are pathetically, distressingly low.

In Japan the general view is that criminals are stupid because the clearance rates are so high.

But good risk or bad risk the problem is the gambler’s not the society’s. That includes the harm done to their children.

I wanted to make a few observations about Lawrence B. Lindsey’s post at The Weekly Standard on the Republican tax reform plan. I agree with him that “the American economy really is sick”:

From 2011-2016, we observed the poorest economic expansion on record. Usually, recoveries from sharp recessions are equally sharp. This recovery was a dud. Barack Obama was the first president without a year of 3 percent real GDP growth while in office. Further, from 2011-2016, annual growth averaged more than a full point less than growth from 1965-2010, a period that includes drag from multiple recessions. Similarly, growth in real personal incomes and wages lagged behind the long-term historic average, and by several measures income inequality increased.

However, I think it’s been sick for much, much longer than Mr. Lindsey appears to going well back past 2011. I also think that the response that recovery is slow because the late recession was a balance sheet recession has gone past its shelf life.

I was nonplussed, however, by his diagnosis of the problem:

Three factors drive an economy: growth of the labor force, growth of the capital stock, and what economists call total factor productivity—how much output is produced by each unit of labor and capital. The poor economic performance of late cannot be blamed on the labor market. From 2011-2016, employment expanded rapidly, though the wages paid by those jobs were decidedly subpar. But from 2011-2015 (the last year for which data are available), capital formation plummeted—by almost 50 percent compared to the average annual growth rate observed from 1965-2010. Total factor productivity declined even more, from a long-term historic average of 1.1 percent to just 0.4 percent, a plunge of nearly two-thirds.

I have never encountered a definition of productivity that did not include business investment. “Capital stock” is the common and preferred stock issued by a company. It’s also a balance sheet term that accountants use to describe equity. I know of no straightforward, direct relationship between business investment and capital stock. There may be an indirect relationship. There may not. It’s contingent.

As I have noted regularly, business investment has declined as a proportion of real GDP and IMO that’s a disaster. It’s been a problem for fifteen years or more, too widely discounted, and misdiagnosed by most.

Using his eccentric definition of productivity, the prescription he proposes has to do with capital formation when what is needed is increased domestic non-residential business investment.

I agree with him that the slow rate of new business formation is a problem:

Part of this can be blamed on overregulation, part on an anti-business attitude (remember “If you’ve got a business—you didn’t built that”?), and part on excessive and complicated taxation.

He ignores another major component of the slow rate of business formation: too many large companies and the crony capitalism that goes hand in hand with too many large companies.

This is absolutely correct:

Under current law, the cost of a new factory or machine is a deduction for tax purposes only over a period of years. Under the House plan, all investments can be expensed—that is, they’re eligible to receive an immediate deduction in the year they are placed in service. Since new investments typically do not produce enough income to offset their cost in the first year, the firm usually has a “net operating loss,” meaning that their costs exceed their income. As under current law, this loss can be carried forward into the succeeding years until the year’s income finally exceeds its expenses. By allowing expensing of new investments, most new firms will not owe any tax in their first few years of operation—the period when cashflow is most critical. That need for positive cashflow is particularly important now when banking regulations make it tougher than usual to secure loans to produce operating capital.

European countries allow current year expensing. To the best of my knowledge we’re the only OECD country that has our byzantine scheme of depreciation.

I believe there need to be limits to current year expensing. For example, I think it should only apply to domestic investmente and should not apply to the acquisition of land.

I also agree with the plan to reduce the corporate income tax to 20%. Zero would be the optimal corporate tax rate but at the very least the corporate tax rate should be brought within OECD norms. Whether in the headline corporate tax rate or the effective corporate tax rate, the U. S. is an outlier with by far the highest rates.

I’m convinced that a spate of trust-busting would have a beneficial effect both on jobs and economic growth but I don’t expect any foreseeable Congress or administration, Republican or Democratic, to tackle that. The simile I’ve used before is that small trees can’t grow in the shadow of big trees. The reality is actually much worse than that since big trees generally don’t go around stomping on small ones or getting the Congress to pass laws that help them while injuring small trees.

Thomas Jefferson once said that when you’re angry count to ten before you speak. I’ve counted to ten and I feel that I need to remark on an op-ed in the Washington Post by Ingrid Newkirk, president and co-founder of People for the Ethical Treatment of Animals (PETA). In the op-ed Ms. Newkirk, arguing against dog shows in general and the Westminster Kennel Club Show in particular, lists a catalogue of horrors:

This month at the Westminster Kennel Club Dog Show, more than 3,000 dogs will be paraded around New York’s Madison Square Garden so that judges can scrutinize every inch of their bodies — from their inbred, squashed-in noses and surgically sculpted ears to their coiffured coats and stubby, amputated tails. The judges will look for “faults” much like Internet trolls look for flaws in a celebrity’s injected lips.

Dogs deserve better than this outdated beauty pageant, which is why we should refuse to watch it.

This month at the Westminster Kennel Club Dog Show, more than 3,000 dogs will be paraded around New York’s Madison Square Garden so that judges can scrutinize every inch of their bodies — from their inbred, squashed-in noses and surgically sculpted ears to their coiffured coats and stubby, amputated tails. The judges will look for “faults” much like Internet trolls look for flaws in a celebrity’s injected lips.

Dogs deserve better than this outdated beauty pageant, which is why we should refuse to watch it.

It’s all about the owners and their egos, not the dogs, who are reduced to living mannequins to be tweaked and primped into something that they aren’t. They are often denied a normal life, lest they step out of their crates and get dirty. And to increase the odds of producing a winning dog, breeders bow to the “breed standards” of the American Kennel Club, which values arbitrary physical traits over health and well-being. Breeders are like rats following the Pied Piper — except it’s the dogs who end up in the river.

This is why dachshunds have such long spines and short legs that they’re susceptible to excruciatingly painful disc disease. It’s also why many Great Danes, bred for long necks and large heads, often develop “wobbler syndrome” — including a wobbly gait, pain and sometimes paralysis as a result of compression of the spinal cord in the neck area.

Cavalier King Charles spaniels who suffer from syringomyelia scream in agony because their brains are too large for their unnaturally flattened skulls. One veterinary neurologist, interviewed for the BBC documentary “Pedigree Dogs Exposed,” described the brains of dogs with this condition as being “like a size 10 foot that’s been shoved into a size 6 shoe.”

English bulldogs, who are bred to have flat faces and unnaturally short airways, labor to fetch a ball, walk or even breathe. There’s a name for this problem — brachycephalic airway syndrome. Pugs, Boston terriers, French bulldogs and Pekingese (the breed of the 2012 Best in Show winner) suffer from it, too.

To ensure that these favored traits remain in a dog’s bloodline, breeders have arranged canine incest, forcing mothers to mate with sons and daughters with fathers. The consequences have been dire: Inbreeding increases the likelihood that recessive genes will be passed down to puppies, resulting in a host of serious congenital defects including epilepsy, hypothyroidism and elbow dysplasia, a disease that can cause lameness and arthritis.

Her account is seriously flawed—full of misconceptions, errors, and outright lies.

Dog shows are not “beauty contests”. If they were representatives from the most beautiful breeds, e.g. Doberman pinschers, Samoyeds, would always win. In fact they rarely win. Dog shows are a way of judging breeding stock. Experienced judges compare the dogs presented to the written standard for their breeds. The winner is the dog or bitch that conforms most closely to the breed standard.

I agree with her on practices like tail docking and ear cropping. They’ve already been banned in Europe and are going out of fashion here in the United States as well, through self-interest if nothing else. Dogs with docked tails or cropped ears can’t compete in international competitions.

For you to understand the balance of my criticisms, I’ve got to explain some things. The Department of Agriculture divides dog breeders into three classes. Class A breeders breed dogs for sale through brokers or pet shops. Class B breeders are brokers. Class C breeders are private breeders who do not sell to brokers or shops.

All of the practices about which Ms. Newkirk complains are engaged in by Class A and B breeders. And class A and B breeders do not participate in dog shows. They have no concern about the dogs’ well-being, only about producing as many dogs as possible.

Ethical breeders subscribe to a formal code of ethics, breed to the standard for their breeds, and work to eliminate the flaws Ms. Newkirk lists.

Are there some Class C breeders who breed to the flavor of the month, don’t care about the well-being of the dogs that they breed, and engage in flawed or unethical breeding practices? Sure, just as there are unethical doctors, lawyers, engineers, and architects. But most are ethical and care deeply about the dogs to whom they’ve chosen to devote their lives.

IMO the Washington Post has lent itself to promoting propaganda. Journalistic ethics required that they reach out to the American Kennel Club or the Westminster Kennel Club for their responses to Ms. Newkirk’s op-ed.

There’s plenty of room for reform in the breeding of dogs and the improvement of dog breeds. I believe in some things about which my dog breeder friends would complain bitterly. I think that given the advances in DNA testing there needs to be much more science in the breeding and judging of dogs rather than the purely pre-scientific approaches presently used.

I think that the European system of proctors is a good one and that dogs of working breeds (Sporting Group, Herding Group, and Working Group) should be required to prove their fitness for the work for which they’ve been bred before they’re allowed to be shown.

I think that the AKC needs to do a much better job of monitoring and sanctioning both judges and breeders.

Above all, I think that Americans should never, ever buy dogs from pet shops. Get your dogs from shelters or reputable breeders.

There’s an interesting article at Popular Science on anti-drone strategies. There’s an astonishing number of them, from nets to attack eagles to electronic strategies. I think that either a jamming strategy or overriding the drones’ control signals is likely to be the cheapest, easiest, and most effective way of opposing them but it’s interesting to see what people are coming up with.

Stat correctly points out that tax reform is unlikely to induce pharmaceutical companies to perform more research:

Drug makers are promising to create tens of thousands of American jobs if President Donald Trump follows through on his promise to give them a big tax break if they “repatriate” cash they’ve stashed overseas.

But that’s not what happened last time pharma got a tax holiday.

Instead, drug makers used the tens of billions they brought back to the US to enrich their CEOs and drive up their stock prices. Rather than adding jobs, they laid off thousands of workers.

In the end, the 2004 tax holiday cost the US government $3.3 billion in lost revenue and did nothing to increase employment or investment in research, according to a Senate report.

“This is one of the very few cases where we have a very clear experiment: Congress enacted a policy, and we have data and analyses showing that it was a failure on the promises that were made,” said Chye-Ching Huang, deputy director of the progressive Center on Budget and Policy Priorities.

More than fifteen years ago here at The Glittering Eye I produced evidence that pharmaceutical companies view R&D as overhead, not production. R&D at pharmaceutical companies varies with inflation, like paying the phone or electricity bills, not with revenues. Lobbying and marketing vary with revenues.

Pharmaceutical companies won’t change that behavior through alterations in the tax code. It will require more basic reforms.

At Environmental Progress Mark Nelson points out that, despite Germany and France’s having produced nearly the same amount of electricity in 2016, Germany electricity was “dirtier”, i.e. resulted in producing ten times the carbon dioxide that French electricity did. Here’s the key passage:

German emissions would have declined had it not closed a nuclear plant and replaced it with coal and natural gas.

Not only did new solar and wind not make up for the lost nuclear, the amount of solar and wind electricity produced in 2016 actually decreased from 2015 despite new additions of solar capacity and extensive additions of wind capacity.

That’s supportive evidence both that people who are serious about reducing the amount of carbon dioxide being emitted should support nuclear power and that solar and wind still are not an adequate alternative to fossil fuel or nuclear generation.

Chatham House, the Royal Institute of International Affairs, has performed a survey of 10,000 people from 10 European countries. The results are depicted in the graph above.

…that a new population wouldn’t cure. At least that certainly appears to be the position that the Chicago Tribune editors are taking:

So while the 59 senators (and 118 House members) dawdle, companies decide not to further invest in dysfunctional Illinois. Credit agencies further downgrade state government. Residents poke “for sale” signs in their front yards.

And if you’re looking for lawmakers who’ll take unpopular votes and actually solve problems, try another state. Illinois has the wrong legislature.

The problem with that is that Illinois representatives and senators are elected from districts and the districts keep returning the same incumbents to office year after year after year.

I’m at a loss to explain it. Stockholm syndrome? Gullibility? The same impulse that moves people to watch houses burning down or gape at auto accidents?

Illinoisans certainly aren’t voting their own interests. What are the alternatives other than a completely different electorate or term limits? And what is the likelihood that the present Illinois legislature, that couldn’t even enact a budget with veto-proof control of both houses, would amend the state’s constitution to impose term limits?