Category Archives: Wage Slavery

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As many as 10,000 people could be working in conditions commonly associated with modern slavery in textile factories in Leicester, an investigation by Sky News has alleged.

Leicester City Council believes there to be about 1,500 textile factories across the city. Most are small businesses, essentially workshops that are housed in ageing, dilapidated buildings, such as the citys old Imperial Typewriter factory.

The east Midlands city was put under renewed lockdown restrictions on 30 June and it is thought that working conditions at many of the textile works may have contributed to the localised outbreak of Covid-19.

It is widely suspected that many of the businesses do not pay workers the 8.72 national minimum wage.

Deputy city mayor Adam Clarke called for government action and added that the working conditions in the workshops was not so much an open secret as just open.

Leicester East MP Claudia Webbe told Sky News she had been contacted by anonymous workers who were too scared to speak out publicly because many were fearful of losing their jobs.

Machinists are being paid 3 an hour, packers are being paid 2 an hour. That is what seems to be the standard, she said.

North West Leicestershire MP Andrew Bridgen told the broadcaster there was a conspiracy of silence that had allowed factories in the city to continue to exploit workers over many years.

The internet retailers have flourished during the Covid crisis because their competition has been shut down. So weve seen a huge extra demand for the products, said Mr Bridgen. He added that there had been a systemic failure of all the protections in Leicester that would prevent this from happening.

The governments Health and Safety Executive (HSE) is investigating allegations some factories forced people to work in unsafe conditions during lockdown.

Modern slavery took many forms, said Brigden, much of it hidden, but this type of exploitation people being paid well under the minimum wage, having to work in unacceptable conditions that sort of abuse has to be stamped out, it has to be examined, we have to follow the evidence and prosecute wherever possible.

Clarke made the point that enforcement of anti-slavery laws was made more difficult by the complex network of bodies involved. He said: There are just too many organisations, HMRC [HM Revenue & Customs], the GLAA [Gangmasters and Labour Abuse Authority], the HSE and others have enforcement responsibilities. There needs to be one enforcement body and that needs to be set up as quickly as possible.

This is a systemic issue that is borne out of poor regulation, poor legislation and exploitation at every level, he added. You have to ask yourself who actually has the power to change this? And that buck stops with government.

A Home Office spokesperson said: The National Crime Agency and others are looking into the appalling allegations about sweatshops in Leicester and the home secretary has been clear that anyone profiting from slave labour will have nowhere to hide.

We have regulations but they are not being policed properly. Its also the responsibility of consumers if you buy an incredibly cheap t-shirt then you know someone has been exploited Cherie Blair, campaigner and barrister

Fast-fashion firms based in the UK have come in for increased scrutiny as sales have boomed during the lockdown amid allegations over working conditions. Quiz said it had suspended a supplier after claims that a factory in Leicester offered a worker just 3 an hour to make its clothes.

It followsa report in the Timesthat an undercover journalist was told by a factory making Quiz clothes she would be paid below the minimum wage.

Quiz said if the claims were accurate, they were totally unacceptable.

Last week, Boohoo faced criticism after a report that workers at a factory supplying goods for one of its brands could expect to be paid as little as 3.50 an hour. Boohoo has stated it is investigating its supply chain to establish where points of vulnerability exist.

The Gangmasters and Labour Abuse Authority (GLAA) is one of the bodies trying to ensure regulations were being followed in factories in Leicester, initiating its investigation following concerns about how some businesses in the city have been operating before and during the localised lockdown.

It said multi-agency visits involving officers from the GLAA, Leicestershire Police, Leicester City Council, National Crime Agency, Health and Safety Executive, Leicestershire Fire and Rescue and Immigration Enforcement had been carried out within the past few weeks.

So far, it said, no enforcement had been used during the visits and officers had not yet identified any offences under the Modern Slavery Act 2015.

GLAA Head of Enforcement Ian Waterfield said: We would also encourage the public to be aware of the signs of labour exploitation and report their concerns to us, by calling our intelligence team on 0800 4320804 or emailing intelligence@gla.gov.uk.

According to campaigners the Medaille Trust, there are about 136,000 victims of modern slavery in the UK.

Leading human rights barrister and campaigner for womens and workers rights Cherie Blair told Sky News today that not only were workers being exploited but so were taxpayers, because of the benefits paid to low paid workers. She said the Modern Slavery Act of 2015 was groundbreaking but there had been a failure to police it and toughen it up, with the government failing to give it real teeth after a review of the Act last year made 80 proposals to give it more muscle. She said since 2010 there had only been seven prosecutions of people not paying the minimum wage.

She added: There have also not been anything like as many factory inspections as there should have been. We have regulations but they are not being policed properly. Its also the responsibility of consumers if you buy an incredibly cheap t-shirt then you know someone has been exploited. It is also the responsibility of companies buying products from these factories. Boohoo [which denies it has broken any law], for example, has a very nice glossy modern slavery statement but the reality of the industry is different.

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Poor working conditions 'afflict 10000 people in Leicester' - Personnel Today

Fast fashion giant Boohoo is facing an investigation into accusations of modern slavery after it emerged garment workers at factories in Leicester, UK were being paid just 3.50 an hour.

An investigation carried out by The Sunday Times last week found textile workers producing clothes for Boohoo's suppliers were being paid far below the UK minimum wage (8.72), while working in unsafe conditions.

Boohoo issued a statement on Wednesday, saying it was "shocked and appalled" by the claims in The Sunday Times.

The company faced criticisms earlier in the lockdown, as workers' rights group Labour Behind the Label reported that staff at the Leicester factories were "being forced to come into work while sick with COVID-19."

Leicester was the first British city to face a local lockdown, after a rise in coronavirus cases. The spike has been associated with the city's textile industry, which has continued to operate throughout the pandemic.

Fast fashion factories in Leicester are a long-standing issue, with authorities often struggling to find evidence of modern slavery, despite the prevalence of sweatshops in the city.

After recording extraordinary sales in the early weeks of lockdown, as the Manchester-based company capitalised on its customers' desire for comfortable clothing, Boohoo's market value has dropped by more than a third since The Sunday Times expos was released.

The fall-out has seen the brand dropped from other online retail platforms, with Next, Asos, and Zalando all cutting ties with Boohoo and its subsidiary brands, Nasty Gal and PrettyLittleThing.

Boohoo's management has launched an independent review of its UK supply chain and pledged an initial 10 million "to eradicate supply chain malpractice."

Environmental experts have long been calling for a "total abandonment" of fast fashion in order to prevent an ecological disaster. The fashion industry is one of the most significant polluters in the world, responsible for 10 per cent of global carbon emissions.

As the public grows increasingly aware of the human and planetary costs of fast fashion, more and more ethical alternatives are emerging. Project Cece, for example, founded by Noor Veenhoven and sisters Melissa and Marcella Wijngaarden, is a tech start-up which has recently become Europe's largest sustainable clothing platform.

"We want to really show fast fashion brands like there's money in [sustainability]," explains Veenhoven, "then we can change the industry. We want to be a platform that will be useless in the future because everything will be sustainable."

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Inside the Leicester sweatshops accused of modern slavery - Euronews

By Anuradha Nagaraj

CHENNAI, India, July 15 (Thomson Reuters Foundation) - Village councils and community groups in India have been asked to protect children from traffickers and help authorities identify and rescue missing residents, amid concerns that the coronavirus pandemic is pushing more people into modern slavery.

India's home affairs ministry this month issued an advisory urging state governments to set up or improve local anti-trafficking units, and work closely with community leaders to warn people about traffickers taking advantage of the outbreak.

Local councils may be asked to keep a register of villagers and track their movements to prevent children being "transported on a large scale for wage labour, prostitution and trafficking", said the directive by the ministry's women safety division.

State governments have also been tasked with launching anti-trafficking awareness campaigns, in addition to ramping up surveillance at bus stops, train stations and state borders.

"Generation of awareness at all levels is considered a very potent and effective weapon to fight the crime of trafficking and exploitation of women and children," the advisory said.

The home ministry could not be reached for further comment.

As India slowly opens up after months of lockdown to control the spread of COVID-19, officials and activists fear countless people without work, food or money may fall prey to traffickers.

Debt bondage islikely to increase as people struggle to pay off high-interest loans while child workers may slip under the radar andreturn to work as industries re-open, charities said.

"Children or youth are more likely to be persuaded or tricked by criminals who will take advantage of their emotional instability and missing support system," the advisory said.

Rishi Kant, founder of the anti-trafficking charity Shakti Vahini, said special measures and extra vigilance were necessary to combat the crime across India in the wake of the pandemic.

"Special committees under the leadership of village heads will have first-hand information on strangers in their neighbourhood or families that are in distress," he told the Thomson Reuters Foundation. "Both will help prevent the crime."

The federal government in March disbursed one billion rupees ($13.3 million) to strengthen existing anti-human trafficking police units at state level and establish new ones along India's borders with countries such as Bangladesh and Nepal.

About 2,400 human trafficking cases were reported in India in 2018, with nearly half of the victims aged under 18, according to the latest available government crime data.

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No way back: Indian workers shun city jobs after lockdown ordeal

Death of 12-year-old Indian farm worker spurs child labour probe

(Reporting by Anuradha Nagaraj @AnuraNagaraj; Editing by Kieran Guilbert. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

Our Standards: The Thomson Reuters Trust Principles.

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India asks local leaders to boost anti-trafficking drive amid virus threat - Thomson Reuters Foundation

Priti Patel is believed to be considering new laws on modern slavery in light of new revelations about illegal working conditions at fast fashion suppliers, citing concerns that existing legislation is not fit for purpose.

According to The Sunday Times, the Home Secretary reportedly believes that cultural sensitivities are preventing police and councils from confronting illegal sweatshops for fears of being labelled racist.

Fashion company Boohoo has appointed Alison Levitt QC to lead an independent review into allegations that their factories were paying staff below minimum wage and not complying with safety rules.

Its board was said to be shocked and appalled by the allegations.

The move follows an undercover investigation by The Times last week that revealed workers in a Leicester factory were being paid as little as 3.50 per hour.

Shares in Boohoo, which also owns fast-fashion brands Nasty Gal and PrettyLittleThing, plummeted nearly 40 per cent following the report, while Asos, Next and Zalando all dropped the fast-fashion brand from sale.

Poor working conditions are reported to be widespread for textile industry employees, who are largely of Asian descent.

Raj Mann, the police contact for Leicesters Sikhs, said some factory owners were cliquish and shared information about cheap workers and approaching raids and inspections.

The local authorities have known these sweatshops exist for decades but theyve been loath to do anything about it for fear of being accused of picking on immigrant or refugee communities, as a lot of the exploited workers are of Indian background, he said.

Within the Asian community people generally turn a blind eye to workers in the community who are on less than the minimum wage. They see it as being better than earning nothing at all.

Sara Thornton, the independent anti-slavery commissioner, said financial challenges caused by the coronavirus pandemic make workers more susceptible to exploitation.

As people have lost their jobs, they are increasingly desperate and will take exploitative work because at that point its the most rational option for them.

On the other side is that if employers are feeling desperate about getting their businesses back on track, they might also feel that they want to cut corners, she said.

At the moment the home secretary can injunct a company and require them to make a modern slavery statement. Thats never happened in five years but thats as powerful as it ever gets at the moment and I think it should be more.

Additional reporting by Press Association

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Modern slavery laws could be updated to tackle 'sweatshops' amid Boohoo allegations - iNews

Over the past three decades, global inequality has reached a critical level. Multinational fashion companies have securedbillions of dollarsby moving production locations abroad and using supply chains in developing countries including Bangladesh, China, India, and Myanmar, where labor costs are very low. The revenues of each of the 25 biggest companies arelargerthan the GDPs of some countries. Despite this, the lives of most of the workers involved in production for many of these companies have not improved.

Many have described the conditions of garment workers in countries across the globe asmodern slavery, and their enduring plight is becoming particularly clear during the current coronavirus pandemic. According to thePenn State Center for Global Workers Rights, at least one-quarter of garment workers in Bangladesh or an estimated 1 million people have been fired or furloughed because of declining global orders amid the coronavirus crisis; many have been laid off without pay. Others, such as those in the supply chain of Boohoo Group, are reportedly being forced to work in unsafe conditions.

Over the past 15 years, Muhammad Azizul, a professor in Sustainability Accounting and Transparency at the University of Aberdeen, has been investigating corporate accountability in relation to the lives of those who work in factories that supply garments to major western companies.In conducting interviews with workers rights NGOs, social auditors appointed by multinational companies and those owning and working in garment factories in Bangladesh that supply goods to big multinational companies including Walmart, H&M, Zara, Marks & Spencer, Primark, Target, Reebok, Kmart, and Kohls, among others, Azizul and his colleaguesfound thatfor the most part, despite all the social audits, social responsibility disclosures and moral narratives that companies use, workers economic and human rights have not improved.

In fact, as Western retailers revenues continue to balloon (revenue for Walmart, for example, topped $514 billion in 2019, while Zaras parent company Inditex generated sales of $31.9 billion, up by more than $2 billion from the year prior), and factory owners inBangladesh which is home to thesecond largestgarment production market in the world after China, with the sector accounting for80 percentof the countrys total export earnings becomeultra-richas a result, the working conditions and standards of living for the individuals who labor in garments factories are seeing little improvement.

In 2018, amid international pressure in the aftermath of the Rana Plaza disaster, Bangladeshs government raised the minimum wage for garment workers. Despite such a legally-mandated raise, the new minimum wage is stillextremely low, and far below the living wage, which has prompted pro-worker NGOs and civil rights organizations to protestthe massive exploitation, slavery and human rights negligence within the garment manufacturing industry.

While the government raised wages, factory owners and industry leaders similarly protested, albeit for a different reason. Many baulk at the idea that the cost of production could become any higher. One factory owner thatAzizul interviewed, asserted in connection with the wage increase, If there is a stringent regulation that leads to costs of production being higher, multinational corporations will leave for another country where they can find cheaper products. Factories in Bangladesh are getting more offers than ever before asmultinational companiesare leaving China, as its cost of production is getting higher because of Chinese living standards. So, if somehow the cost of production becomes higher [in Bangladesh], the reality is that manufacturers will lose contracts, as there is no long-term commitment bymultinational companies.

This same factory owner reasons against any increase in production costs by indicating that profit maximization protects national economic interests. To him, more profit means more export earnings, more foreign reserves for the country, and a more stable economy. But this seems to go hand in hand with risking workers basic economic and human rights. In Bangladesh, the idea that national economic interest is at stake appears to be more of a concern than the protection of workers rights.

This is perhaps unsurprising, as the garment industry has also changed Bangladeshs political system. Businessmen are increasingly finding roles in parliament. After Bangladesh gained independence from Pakistan in 1971, 13 percent of MPs in the countrys first parliament (1973) were businessmen. By 2014, this had risen to59 percentby 2014 and to 61.07 percent in 2018.The massive participation of businessmen in the past two elections both of which have been criticized overboycottsand allegations ofvote rigging has given the country a new shape.

In 2020, this has come to a head. The export-oriented garment industry in Bangladesh comprises more than 4,000 factories and five million workers, the majority of whom are women. The industry earns approximately$35 billioneach year by supplying garments to western companies. While such trade has already boosted the huge economic power of factory owners, the coronavirus pandemic is leaving workers in a much more vulnerable position than factory owners.

Western multinational companies have started cancelling orders, some reportedly without paying for production costs already laid out. Millions of workers are facing destitution having beensent home without pay. As of April, more than$3 billion in orders to around 1,150 factories were in limbo, leaving around 2.8 million workers, mostly women, facing poverty and hunger. In order to complete those orders not yet cancelled, some owners have keptfactories openthrough lockdown without scope for proper social distancing. Restrictions for factories were then relaxed in May despite theincreasing numberof coronavirus cases in Bangladesh. Understandably,many fearthat more and more workers will get infected in the factories.

Some of the biggest retail companies have taken todelaying paymentsand asking for discounts from factories with potentially catastrophic consequences for the women who make their clothes. Neither government nor factory owners nor even the multinational companies are taking clearresponsibility for workerswho were sacked or lost their jobs from factories.

All the while, as the working conditions and the leverage that multinational retail companies have over their suppliers make headlines across the globe largely as a result of heightened awareness in connection with COVID-19, it is worth remembering that these situations do not differ significantly from the status quo, and that inequality between western suppliers and factory owners, and the individuals tasked with making out clothes has been growing, pandemic or not.

Muhammad Azizul is the Islam Chair in Accountancy, and a professor in Sustainability Accounting and Transparency at the University of Aberdeen. (Edits/additions courtesy of TFL)

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COVID-19 is Shedding Light on the Relationship Between Bangladeshi Suppliers and the World's Largest Apparel Brands - The Fashion Law

Meet Sampa Akter. She sews clothes for global brands in Bangladesh. As with millions of others, she was sent home in March with no pay as COVID-19 cancelled orders. Ninety-eight percent of buyers said no to paying lost wages, rich multinationals included. Some are paying now. More factories have reopened. But women like Sampa across the industry, who already lived pay cheque to pay cheque, now face wage cuts. They fear hunger more than sickness. Not all are hit equally, however. It takes a top fashion brand CEO four days to earn what Sampa does in a lifetime.

Think of Jason Hargrove, a bus driver in Detroit, US. He posted a video expressing his frustration about people spreading the virus. Days later, he died. Black Americans, making up a disproportionate number of bus drivers, have been killed at three times the rate of white people by COVID-19. In the UK its four times. Two times if youre ethnic Pakistani. Again, not all are equally hit. If you live in a rich area, your chance of dying of COVID-19 is halved.

Now consider billionaires. If the richest man on Earth made a pile of all his wealth in $100 bills and sat on top, he would be in outer space. US billionaires are half a trillion dollars richer than when the pandemic began. Were seeing similar trends across the world. This at a time in which half a billion people face being pushed into poverty, amid the worlds worst recession since the Great Depression, according to the IMF. By December, more people could die each day from hunger linked to coronavirus than from the disease itself.

Such extreme differences define our divided world. They also explain this inequality virus. But its seen as improper to speak out politically, as our families have been hit personally. That politeness looks increasingly like a fig leaf, stopping us from asking hard questions.

Is it not time to get talking again about the economic model that betrays us? About the role of billionaires, and an extreme and widening gap between the richest and the many? COVID-19 entered a world that hasnt seen such concentration of wealth since the days of robber barons and empire. This great divide has made the 99% of us less safe as a result.

It is time to talk, too, about how our great challenges share roots in inequality. The plunder of our planet for profit by a tiny few. White supremacy and racism that systemically excludes people of colour from safety and opportunity, and is used to divide us. Sexism and patriarchy that exploits womens unpaid care work and cheap labour, like that of Sampa, for profit. The democratic breakdown caused by elites buying policies, politicians and a pliant media.

A world in which 1% of humanity controls as much wealth as the other 99% will never be stable, said President Barack Obama at the UN in 2016, citing our new data.

By 2017, based on the data at the time, we showed that eight billionaires just eight men then owned more wealth than the bottom half of the global population, 3.7 billion people.

By 2019, our data revealed how billionaire fortunes were growing by $2.5 billion each day, while the wealth of half the world, collectively, had dropped by over 10%.

I hope these data are taught in classrooms some day soon, recalling a foolish era we must never return to. Neoliberalism for four decades told us GDP would be good for us all, but it was mostly good for the rich. It told us cutting regulation, taxes and labour laws would offer freedom, but instead it gave us fear. It got rid of referees and left the bullies in charge.

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Some wish to return to normal after the coronavirus. Normal is a world in which 10,000 people die each day for lack of access to healthcare what chance did we have to beat COVID-19? while the richest still try to privatise our public health. In which governments, lobbied by big business, undermine the unions we rely upon more than ever for security at work, with 85% of governments violating the right to strike. In which weve long been hurtling towards climate apartheid, with the carbon footprint of the top 1% 175 times that of the poorest 10%.

Aiming to restore the pre-COVID-19 normal is to forget why 2019 saw protests against inequality all over the world. Our economic models need transformation, not restoration. The Financial Times recently called for radical reforms to reverse the prevailing policy direction of the last four decades. They are right.

Change is coming. Neoliberalism faces its reckoning. But the old way will not die fast. Those who burned down forests will lecture us on planting seeds. Greed-washing will be in vogue.

So we must be explicit. A better future relies on our actively and significantly redistributing the wealth and power of the 1% to everyone else. A great reset for our world must be a great equaliser. One that ends the billionaire boom, creating hope for a post-COVID-world.

We know what works. Quality public healthcare, for free, for all. High and inescapable wealth taxes, as rich people are now calling for. A universal labour guarantee that protects workers and ensures a living wage.

Go further yet. Sledgehammer emissions cuts towards net zero. Recognise care work as real work and pay care workers who do the vital work of caring for our children, parents and the vulnerable a living wage. Begin exploring reparations for slavery and colonialism. Regulate who owns, and benefits from, innovative technologies. Grow equitable business models. Go beyond GDP to well-being, as New Zealand has. These are supposedly radical policies that leaders are already trying. It is achievable. Its exciting.

Nabil Ahmed is head of Executive Strategy and Communications, Oxfam International.

This article is curated from the World Economic Forum.

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COVID-19 has let the virus of inequality run rampant - The Mandarin

First of all, let me say that the Black Country name is nothing to do with race or ethnicity. And the imagery or colours of the Black Country flag are not intended to be linked to slavery.

But that doesnt mean questions can not be asked of the Black Country region or the symbolism behind the Black Country flag. We shouldnt blindly beat our chest in defence of both the flag or the region without knowing its history.

The Black Country is a region of England which today covers the metropolitan boroughs of Dudley, Sandwell, Walsall and Wolverhampton.

The region was the birthplace of the Industrial Revolution and its landscape was dominated with coal mines, iron foundries, glass factories, brick works and many small industries for as far as the eye could see.

Chimneys of factories, furnaces and small home forges bellowed out smoke and soot to heavily pollute the air.

The pollution filled the sky and the region which was described as 'Black by Day' and 'Red by Night' by Elihu Burritt became known as the Black Country.

In 1712 the Black Country changed the world when it became the first place to harness the power of steam with the Newcomen Engine.

In 1828 the working class people of the region built the Stourbridge Lion which was the first steam locomotive to run in the USA, they made the glass and iron for the Crystal Palace and its great exhibition in 1851 and also forged the anchors and chains for great ships like the Titanic.

The hard work by Black Country people changed the world and shaped the modern world we see today but that is not to say that the region and its work force did not produce items for the slave trade, or that we should dismiss the regions links to the enslavement.

African men and women were undoubtedly shackled and chained on the Atlantic crossing with items that were produced in the Black Country. Once they reached their destination, they would be held captive with Black Country made products of various descriptions.

There is evidence of Black Country products marketed specifically for the slave market with items listed as Negro Collars and African Chains. Enslavement was big business and rich men capitalised on that industry to make as much money as possible.

The rich people who marketed these products did not care about the slaves that their products were used on and they did not care about the people who made the products either.

The working-class people of the Black Country were extremely poor. Life expectancy in the region in 1841 was 17 years old. People worked from the age they could walk, and some died before they became adults. There was no luxury for our ancestors and there was no profit. They worked hard in hope they would live a little longer than the people dying around them. If cholera didnt kill them then hard work would.

The working class people of the Black Country never profited from the slave trade, in fact there is little evidence to suggest that they even knew what their products were used for.

When modern Black Country folk show pride for the history of our region, it is the working-class people we are proud of. We dont take pride in the starvation wages that our ancestors were paid or the squalid conditions they were forced to work in or the rich who profited from the slave trade. We celebrate their hard work and the fight they put up to ensure the first ever minimum wage, we respect the courage shown by people uniting and laying down of their tools to ensure women were paid equally.

This is not a case of pitting the plight of our Black Country ancestors against the horrendous treatment of the people who were enslaved. It is saying that in many cases working class Black Country people and black slaves were victims of the very same people who profited from their labour.

To cause offence intention is important and there is no intention to offend anyone with the Black Country flag. If I am honest most people I speak to are not offended.

The Black Country flag was designed by 12-year-old Gracie Sheppard in 2012. It features a glass cone to represent the glass industry of the Black Country. The cone is flanked by black and red panels inspired by Elihu Burritts famous description of the area black by day and red by night, and the chain across the centre represents the chain industry in the region but is also to symbolise the linking up of the different communities.

I believe we should all take time learn about the remarkably interesting history of our region and it should be open for discussion.

Each year we celebrate Black Country Day on July 14th. We have a Black Country anthem and Black Country flag.

I am not an expert, just someone who loves the Black Country and exploring our history.

I am proud to fly the Black Country Flag.

Steve Edwards

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Black Country Festival founder on the meaning of the Black Country flag - expressandstar.com

Racism, xenophobia, and other forms of discrimination against minorities are, sadly, common phenomenathroughout history and in the current moment. In the United States, the Black Lives Matter movement and the protests that followed the murder of George Floyd in Minneapolis highlight that many Americans consider discrimination a serious problem in the country today.

In recent research, my coresearchersVolker Lindenthal and Fabian Waldinger, both at the University of Munichand I consider how discrimination affects a countrys economy. Discrimination is extremely hurtful to individuals from targeted minorities. But, as we demonstrate, the effects of excluding talented individuals from economic opportunities tend to go further: when a society discriminates against a specific group, its entire economy can suffer.

The case we analyzed involves discrimination against Jews in Nazi Germany. We looked at the period after the Nazis gained power, on January 30, 1933, when discrimination against Jews quickly became commonplace in Germany. Many Jews were forced out of their jobs. By 1938, individuals with Jewish ancestry had effectively been excluded from the German economy.

The key idea in our study is that whenever discrimination interferes with the optimal allocation of talent, the economy suffers. This idea has its origins in formative work from the 1950s by the late University of Chicago economist and Nobel laureate Gary S. Becker, who argued that employers who are biased against hiring minorities harm themselves by missing out on talented individuals. We developed a technique to estimate how large and persistent the effects of such a loss of talent can be. And in our example, we find those effects are sizeable and long-lasting.

In 1932, Jews held about 15 percent of senior management positions in German companies listed on the Berlin Stock Exchange. When these top managers were kicked out, the companies were unable to replace them adequately. New senior management teams at affected companies were less connected to other companies, less educated, and had less managerial experience. The stock prices and profitability of the affected companies declined sharply after 1933, relative to unaffected companies. These effects were distinct from other shocks hitting German companies after 1933, for example, policies by the Nazi government or changes in demand for companies products.

When intolerance prevents individuals from exercising their talents, there tend to be widespread, long-lasting negative economic effects.

The aggregate effects of losing Jewish managers were large: an approximate calculation suggests that the market valuation of companies listed in Berlin fell by almost 2 percent of German gross national product. And besides being drastic, the effects were persistent: the performance of affected companies did not recover for at least 10 years, the end of our sample period. This suggests that the rise of a discriminatory ideology can lead to first-order and persistent economic losses.

Our case study involved dismissals of highly qualified senior managers who ran large, listed German companies. Hence, the discrimination we focused on was targeted at individual business leaders who were at the top of the economic pyramid. This pattern of forcing highly qualified individuals to give up important positions in the economy is all too common in history, bringing to mind the internment of Japanese Americans during World War II or the expulsion of managers who follow the cleric Fethullah Glen from Turkish corporations in 2016.

There are important differences between the 1930s example of antisemitism in action and what many Black Americans face today. A history of slavery and racism has made it more difficult for Black Americans to reach leadership positions. But just as in Nazi Germany, these factors have an economic cost. For example, barriers such as limited access to educationmay have prevented an optimal allocation of talent. Some of my colleagues find that as such barriers fall, average earnings rise. (For more, read our Winter 2018/19 articleHow women and minorities have driven wage growth.)

The precise dynamics of how discrimination affects an economy are different depending on the form discrimination takes. However, there appears to be a similarity in the economic outcomes. When intolerance prevents individuals from exercising their talents, there tend to be widespread, long-lasting negative economic effects. The effects we documented lasted a decade, at least, and that was from a single example of a discriminatory purge. When it comes to centuries of race-based discrimination, our findings may suggest that companies and the economy are paying a high price.

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How discrimination harms the economy and business - Chicago Booth Review

Jul 14th 2020

THE PAST IS never dead. It's not even past, wrote William Faulkner, an American novelist. The observation rings especially true for the agonising problem of race in America. After centuries of slavery and segregation, African-Americans achieved formal legal equality only in the 1960s. Yet discrimination persists and they are far more likely to be victims of police violence than other demographic groups.

Cory Booker is a Democratic senator from New Jersey with bold ideas on how to improve the situation. In an interview with The Economist, he traced the cords of injustice that lay the foundation for todays problems, and offered solutions ranging from baby-bond legislation (giving poor children trust accounts) to removing ageing lead pipes that literally poison the countrys children.

Thats not radical, he says about these sorts of reforms, but common moral sense. The interview below with Mr Booker has been lightly edited.

***

The Economist: When you see a mass movement for racial justice happening again in this country and when you see frustration, not just over criminal justice, but the fact that black and white income gaps and wealth gaps are basically the same since 1968, what does that make you conclude about American society and government? Is it that formal legal equality has failed to guarantee equality of opportunity for black Americans?

Cory Booker: Look, we are a nation that has strong, sort of unbroken cords of racial injustice that have been with us for generations. And where lots of generational wealth has been created through the GI Bill [support to veterans for housing and education] through Social Security, through the Homestead Act, which granted massive tracts of land to new immigrants to this country. These are things that blacks were excluded from, that were barriers to economic opportunity.

We have a nation like that, up into my lifetime. My parents literally had to get a white couple to pose as us in order to buy a home in an affluent area of suburban New Jersey with great public schools. But we still live in a country where this denial of equal education is a part of our national fabric. Even today, we see schools that African-Americans attend receiving dramatically less funding than schools that are predominantly white.

These strong cords of injustice have never been broken. Our prison population has gone up about 500% since 1980 alone. Theres no difference between blacks and whites in using drugs or dealing drugs. But African-Americans were arrested for those crimes at rates three or four times higher than whites.

We have powerful, powerful forces of overt and institutional racism over the years that has really underdeveloped African-American opportunity and equality. It stretches now from the health-care system to issues of environmental justice. The number one indicator of whether you live around a Superfund site [designated a heavily polluted area] or drink dirty water or breathe unclean air is the colour of your skin. All of these things in their totality create a nation that still has such savage disparities and outcomes based upon race.

And I am encouraged that in this momentand I hope it's not a moment, I hope it grows to a greater movementthere is a greater expansion of our circles of empathy for each other. A greater understanding of the injustices that are there. It seems to be the dawning of an expansion of our moral imagination about how we can actually become a nation of equality, a nation of justice, and a nation that honors its highest values with a reality that reflects them.

The Economist: And how do you begin that difficult task of unwinding those deep threads that have not ever been broken? Whether its housing, policing, criminal justice, environmental issueshow do you start that? And do you feel optimistic about the possibility of change on some of those entrenched policy areas?

Mr Booker: Well, in a larger sense, first of all, the personal pronoun you use: I hope it's not a you, I hope its how do we do that? It's very hard in our country for us to create leaps in advancement without there being a greater sense of collective we, and a collective responsibility. The incredible legislation that's passed in our past from the suffrage movement to the labour movement to the civil-rights movement of the 1960s were all movements that happen because large swathes of American people put on personal responsibility to make dramatic change. The progressive movement in the 1920s was fuelled by people who weren't often directly affected by issues, seeing an urgency to change based on a growing consciousness.

It seems to be the dawning of an expansion of our moral imagination about how we can actually become a nation of equality

That is still ongoing: trying to expose the realities that are affecting our country as a whole and black people in particular, so that people feel a sense of moral urgency to address them. There are things that go on in our prison system that most Americans dont realise happen: that we shackle pregnant women when they're giving birth, that we put children in solitary confinement for extensive periods of times, even though our psychological professionals say that its torturous and causes brain damage.

I was encouraged when I heard very learned people telling me they never knew about what happened in Tulsa, Oklahoma. [The prosperous neighbourhood of Greenwood, known as Black Wall Street, was destroyed by white residents in 1921.] Where people didn't know about the many places around this country that had seen such racial terror to the point where thousands upon thousands of Americans were lynched, often elected leaders, poor judges pulled out into streets and beaten. These stories have just been whitewashed from our history. I'm hopeful that we are at a period where awareness is growing, and with that, a sense of urgency to address it.

Now, when you talk about me in a particular senseand use that personal pronoun like you, Cory Booker, as a senatorI have an obligation to try to continue to push the bounds of justice as a United States senator and propose things that will actually have a very practical impact on disparities.

For example, baby-bond legislation is not that sexy, but it's this idea that every child, regardless of race, born in our nation, gets a $1,000 savings account. And then based upon their income, just like we base the earned-income tax credit, that child will get up to $2,000 a year placed in an interest-bearing account that compounds interest. By the time they're 18, the lowest-income American kids will have upwards of $50,000 saved.

Columbia University looked at that legislation for young adults and found it would virtually close the racial wealth gap. Policy solutions like that, like massive expansions of the earned-income tax credit [which tops up the wages of low-income Americans] or the child tax credit. These are things that affect poverty overall in our country, but would end poverty for a significant percentage of African Americans.

The Economist: After this period of consciousness-raising, what else might go in a Great Society-like radical programme of change, assuming that Mitch McConnell and Donald Trump were not part of this conversation for the moment?

Mr Booker: I hope that our policies begin to reflect what real public safety is. We know unequivocally by the facts that expanding Medicaid lowers violence. Expanding the earned-income tax credit lowers violence. You can go through these things that you know empower people. There are pilot programmes all over this country that show that dealing with people who are struggling with mental illness with police causes their death.

I hope that our policies begin to reflect what real public safety is

Black folks are 2.5 times more likely to be killed by a police officer than somebody white. Someone with a mental illness is over ten more likely to be killed by the police than someone whos white. And to think that we actually could have services that help people have [mental] health-care. Thats not radical, that's just common fiscal sense, as well as common moral sense. To have an expansive view of public safety, to start investing as a society into those things that help people, who are hurt and fragile, can lead to greater human flourishing.

Our country is an outlier. We really dont do much for children until they turn five or six. So we lead industrial nations in infant mortality, in maternal mortality and in low-birthweight babies. It would be cheaper to revive at-risk women doula-care than to pay the extraordinary costs of premature birth. Something called nurse-family partnershipswhich is just having a nurse visit a home to be supportive with information for at-risk pregnant womenactually lowers encounters with police dramatically. Every taxpayer dollar you spend on the programme saves four or five taxpayer dollars because it lowers visits to the emergency room for that mother and that child.

Its not like we dont know how to elevate human potential while saving taxpayer dollars, or how to lower our reliance on police, courts and prisons. We know enough already. Its just that were not, as a society, collectively prioritising what would be a much more beloved way to move forward. And so this greater human consciousness, I hope elevates this ideal that, whether youre a fiscal conservative or a progressive liberal, these are things that abide with all of our values. Its why Ive had some success moving criminal-justice reform with strange partners, like the Koch brothers or the Heritage Foundation.

In a globally competitive environment, America is really falling behind those nations that do a better job of elevating human flourishing and human potential. The number China has in their top 10% of their high-school students is relatively close to the number of all of our high-school students. In a global knowledge-based society, your greatest natural resource is the genius of your children.

In a globally competitive environment, America is really falling behind those nations that do a better job of elevating human flourishing and human potential

And were doing a bad job because were a nation that has an astonishingly high level of children whose brains are addled by permanent lead damage. There are over 3,000 jurisdictions where children have more than twice the blood-lead level of Flint, Michigan, and they are disproportionately black and brown children. And so right now we don't even care enough. And I know we have the heart for it, but were not manifesting it in our policies to do something simple, which would have been a fraction of the last covid-19 bill. Why dont we as a country replace every lead service line in America that goes to our schools, to day-care centres and to homes in the United States that would actually pay for itself through the productivity of those children and saving them from the violence associated with lead poisoning.

There are a lot of common-sense things that we can do that should accord with the values of everybody who calls themselves pro-life to everybody who calls themselves a progressive, but we're just not doing it.

And so this is what the echoed words of our ancestors said. Martin Luther King, who wrote in his Letter from Birmingham Jail, was very critical. He actually said Im not as upset with the White Citizens Council or the KKK, I'm far more upset with the white moderates who are doing nothing. And he eloquently said that we have to repent in our day and age, not just for the vitriolic words and violent actions of the bad people, but the appalling silence and inaction of the good people.

Well, I fear that we will have to repent in our generation, if more of us who are good peopleand that is the overwhelming majority of Americanslet another generation go by, where we dont correct these persistent injustices with strategies that we know work and that we know will save us taxpayer dollars. Yet we fail to engage in the struggle to make them possible. As the great abolitionist Frederick Douglass said, If theres no struggle, there is no progress.

The Economist: A programme like baby bonds, which would do a lot on the racial wealth gap, would take 18 years for those accounts to accrue. And in the present day, theres a strong racial child-poverty gap. What do you see as the tools to fix that problem?

Mr Booker: The two very obvious tools are a massively expanded earned-income tax rate by more than half and a massively expanded child tax credit, like a lot of our peer nations do. But there's other tools that wed have to use to catch us up to the rest of the industrial world, like having affordable child care. We have a country in which child care in most states is more expensive than state-college tuition. It is unconscionable that we are doing that.

These are insane things that go on in this country that in our peer nations do not

We have something called the mortgage-interest deduction, for example, that is overwhelmingly used by the higher income. That tax expenditure goes to the wealthy in our country overwhelmingly. Why dont we do something for working people in America and have a rental tax credit if youre paying more than a one-third of your income on rent, which would cut poverty by the millions in America and give people security? One of the things that so undermine student performance are families who face evictions and are jumping from apartment to apartment. So theyre facing issues of fairness in our tax code like the ones I just mentioned, while also dealing with issues like paid family leave or child care that would take America so far in ending racial gaps.

A friend of mine named Natasha who worked a minimum-wage job couldn't afford housing. Her son was sick with asthma. Again, a black child is about ten times more likely to die of asthma complications than a white child. And she had to make a terrible decision of whether to stay at her job and get a pay-cheque that she really needed to keep a roof over the head of her kid, or to leave and go across the street and be with her child in the emergency room who was gasping for breath. I mean, these are insane things that go on in this country that in our peer nations do not. And we put our families in deep levels of stress and anxiety that ultimately undermines their overall flourishing.

We in this generation can end those things if we are committed to making real the ideals of our country and the laws of our countrythat we really are a nation that believes in life and liberty and the pursuit of happiness; that believes in human flourishing; that believes in equal justice under the law. And these are things that I think are long past [due]. Time has come. And, interestingly, they poll really well on both sides of the political aisle. But our people in elected office need more of a push to make them the law of land.

The Economist: You remain the optimist.

Mr Booker: Thank you. Forever, a prisoner of hope. And if anything, our nation's history is testimony, the triumph of hope, often under insurmountable conditions and odds.

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Making real the ideals of our country - The Economist

NONE DARE CALL IT ELEXTORTIONBut Northrop MIA from defense-contractors warning

Last week, leaders of eight of the nations biggest defense contractors went begging, titanium cups in hand, for federal dollars to ease the pinch the COVID-19 virus is inflicting on their bottom lines. All the usual suspects were there: BAE Systems, Boeing Defense, General Dynamics, Huntington Ingalls, L3Harris Technologies, Lockheed Martin, Textron and Raytheon.

Except one.

Northrop Grumman chief Kathy Warden didnt join the two July 7 letters signed by the other eight CEOs to the Pentagons top weapons buyer and the acting head of the White Houses Office of Management and Budget. Without such aid, the CEOs said all sorts of disasters will befall the nationthwarting its ability to meet the challenges and threats associated with great power competition. Frankly, thats an absurd claim when it comes to a $750 billion annual Pentagon tab that tops the Cold War average. Although the letters dont mention sums, a top Pentagon official saidJuly 13 that it is seeking about $10 billion to pay contractors virus-related costs.

Interestingly, only the letter to the White House brazenly warned the OMB chief of one particular downside if the Pentagon doesnt reimburse contractors for COVID-19-related expenditures: This would create a ripple effect throughout the defense industrial base, leading to less investment in new technologies and significant job losses in pivotal states just as we are trying to recover from the pandemic.

The letter didnt bother to define pivotal, but with President Trumps re-election in doubt, it doesnt take Einstein to figure it out. It reads like a blatant spiel suggesting Trumps re-election might be aided with a bunch of bailout billions. Frankly, this surprises The Bunker, because the defense industry is generally more deft when it comes to such transactions.

So why is Northrop different? The company says ithas already realized savings because of efficiencies achieved following its recent $9 billion acquisition of rocket-builder Orbital ATK, Warden told defense-industry analysts during an April 29 conference call. We have some increased COVID-19 related cost, as any company does, as we do more of the safety protocols, cleaning, social distancing, she added. And we fully expectthat we can offset those through other cost reduction measures that we anticipate taking this year.

Ten weeks passed between that Northrop conference call and the July 7 letter to OMB. That suggests Warden still believes her company can handle the extra costs without Pentagon help. Too bad shes the only one.

Theres pork on land, sea and airso why not space?

In the olden days, Congress brought home the bacon by wheedling defense officials and strong-arming the competition. It was a bare-knuckle brawl to land contracts for the factories in their districts that made tanks, warships and warplanes for the Pentagon. But given the merger-maniain the defense biz, its been tough for lawmakers and local leaders to find glistening hunks of pork to satisfy their hungry constituents. Thats what makes the fight to land the headquarters for the Pentagons new Space Command so tempting. Twenty-six statesthats 52% of the nation, according to The Bunkersrudimentary math skillshave put in bids to host the new HQ.

The Air Force isnt naming the contenders, saying they can ID themselves if they want. Those who have declared their interest to seek the other white meatinclude Alabama, California, Colorado, Florida, Illinois, Michigan, Ohio, and Washington state. Several states have multiple candidates.

The Air Force, which oversees the new military service, invitedlocales that met certain requirementsto enter the Space Command sweepstakes. Bids were due June 30, and the Air Force plans to announce its preferred choice in January. That will trigger an environmental review that could take up to 24 months before the choice is approved, or not.

President Trump ordered the creation of U.S. Space Command (to wage war in space) in December 2018; a year later he created U.S. Space Force (to train and outfit members of Space Command; of course its confusing). Amid grave threats to our national security, American superiority in space is absolutely vital, he said at the Space Forces creation. It is the nations eighth uniformed service (the others, in order of creation, are the Army, Marines, Navy, Air Force, Coast Guard, Public Health Service and National Oceanic and Atmospheric Service). The command is temporarily based at Colorados Peterson Air Force Base. The future headquarters will ultimately have about 1,400 workers, which is pocket lint in terms of Pentagon dollars. But that hasnt stopped the National Guard from pushing for a Space Guard.

Not everyone is impressed with the base-basing contest. Rep. Jim Cooper, the Tennessee Democrat who sits on the armed services committee, calls it a moondoggle. So even though the new service doesnt yet have a permanent home, its already funnier than Netflixs Space Force sitcom, which tried to poke fun at the nations newest service.

Guerilla wars are complex. Think Vietnam, if youre as ancient as The Bunker, or Afghanistan, if youre a newer model. They lack the clarity of what we used to call, in the days before nuclear weaponsunconditional war. Back then, victory was made plain by vanquished foes signing a document of surrender aboard a battleship, or some such sideshow of force. President Trump and his top military adviser, Army General Mark Milley, are now engaged in a similar fight, in which only one can prevail.

Last week, Milley, chairman of the Joint Chiefs, made it crystal clear he doesnt like the 10 posts his service has named for Confederate officers. Those generals fought for the institution of slavery, he told the House Armed Services Committee. The Confederacy, the American civil war, was fought and it was an act of rebellion. It was an act of treason against the Union, against the Stars and Stripes, against the U.S. Constitution.

Lots of senior military officers feel that way. What was surprising about Milleys volley was that it came less than a month after his commander-in-chief declared the names would. Not. Change. These Monumental and very Powerful Bases have become part of a Great American Heritage, and a history of Winning, Victory, and Freedom, Trump tweetedon June 10. Therefore, my Administration will not even consider the renaming of these Magnificent and Fabled Military Installations.

Unfortunately for the President, both houses of Congress and his top military aide are now moving to the other side. Trump has promised to veto any bill that mandates the names be changed, but vetoes can be overridden if two-thirds of each house agrees. Yet thats not whats important. After more than three years of sycophancy, its bracing to finally see a general climbing out of his E-ring foxhole and stating plainly that he believes his boss is wrong.

The good news is that the nation has leaders like Milley and Warden. The bad news is that they must be feeling pretty lonely

Panglossian Chagossians?

With the U.S. military engaged in some serious soul-searching about the acknowledged racism in its ranks, there another fight for equality involving the Pentagon that is happening 9,500 miles away. The U.S. has been using the 17-square-mile isle of Diego Garcia as a stationary aircraft carrier since the 1970s. Pretty much smack dab in the middle of the Indian Ocean, it has served as a key American base during the Cold War, as well as more recent conflicts in Afghanistan and Iraq. The Pentagons island landlord is Britain, which seized it from the nation of Mauritius and its indigenous Chagossian people in 1814. The United Nations voted 116-6 last year calling on Britain to give Diego Garcia and the other 54 islands in the Chagos Archipelago back to Mauritius (London and Washington were in the minority). Mauritius UN ambassador recently said the U.S. military could keep its base if Mauritius regains sovereignty over the island, Defense One reported July 10.

Thats mighty generous of them, all things considered. After the British forced all of the roughly 1,500 Chagossian people from the island between 1968 and 1973, they ultimately were replaced with the U.S. military base, part of which was known asCamp Justice. Apparently, the irony proved too much, so the base was rebrandedas Thunder Cove in 2006 (Footprint of Freedom is another name favored by the U.S. military for the island). But stealing is still stealing, and Plunder Cove is a colonial legacy the U.S. should be eager to shuck.

Unacceptable and unsustainable

Its pretty rich how angry the House Defense Appropriations Subcommittee has gotten toward the Pentagon, complaining about everything from its treatment of military families to ending F-18 production. The contravention of the constitutional authority of the United States Congress has now become habitual, the panels report accompanying its latest spending bill reads. The Committee finds this to be both unacceptable and unsustainable, it added, according to a July 9 piece by CQ Roll Calls John Donnelly. Of course, these lawmakers might have more standing to gripe if they took more seriously their most solemn responsibilityvoting to declare, or not declare, war. That hasnt happened since 1942.

Gold-plated silver bullets

The Air Force Association is complaining in a new paper that both the Pentagon and Congress continue to place a premium on cheapness when it comes to buying new weapons, according to a July 8 account in the AFAs Air Force Magazine. The Bunker must have missed it.

War-torn

Fascinating tale of an Army photographer, now 96, and his assignment covering military medicine during World War II, in the July 13 Washington Post. He trained for the assignment at the Army Medical Museum, which The Bunker wroteabout in 2017.

The Viruses are coming!

Strange how things work out. Now comes word that COVID-19 has led the Air Force to station its ICBM teams in, ahem, bunkers 60 feet underground for as long as two weeks to reduce the chance theyll fall prey to the virus. The moves are unprecedented and stretch beyond even the training scenarios for doomsday events that these forces previously practiced, Paul Shinkman reported in U.S. News July 9.

Top gun

The Navy has its first Black female fighter pilot, Military.com reported July 10. Lt. j.g. Madeline Swegle just finished training aboard the T-45C Goshawk and is expected to end up an in F-18 or F-35 cockpit. Reminds The Bunker of that day back in 1993 when then-SECDEF Les Aspin lifted the ban on women flying in combat. The Air Force quickly rolled out some of its female fliers in a Pentagon briefing room to make PR hay, only to be outdone by the Navy. The sea service had several of its own female pilots land at, of all places, Andrews Air Force base, where reporters had been helicoptered in from the Pentagon for a tarmac press conference. Guess whose pilots led the evening news?

Canine cuts

The Marines are planning to shrink from 184,000 to 170,000 leathernecks between now and 2030. So guess it only makes sense that their Military Working Dogs count is slated to be cut from 210 to 150, Military.com reported July 10. "We have what we call single-purpose dogs and dual-purpose dogs, the Marines dog boss says. We're trying to get more dual-purpose dogs, because we feel like we get more bang for the buck." Gotta love Marine-talk, although he should have said more bark for the buck.

The orange-dust menace

You might think 21st Century weapons would be all electrons, pixels and touchscreens, but youd be wrong. Take the Pentagons THOR (short for Tactical High-Power Microwave Operational Responder) a drone-killer now under development. Developers wanted it to be as easy to operate as an iPhone, so they gave it a touchscreen. That sounds greatexcept you find out that that doesnt work for warfighters who are pulling a long shift, because they do things like eat Cheetos while theyre sitting there working, and then the touchscreen does not work, an Air Force scientist reported, according to a July 7 dispatch in Breaking Defense. No word yet on whether the problem has been solved with Fritos.

Thanks for munching all the way through this weeks edition of The Bunker. Try to stay safe out there, while trying to look out for society before looking out for yourself

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