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Daily Reckoning founder Bill Bonner thinks central banks are waging war on the markets. He also believes they will lose.

I wholeheartedly agree with Bonner's rationale. Let's tune in.

This is a guest post courtesy of Bill Bonner and the Daily Reckoning.

Why the Feds Will Lose Their War on the Markets

The markets continue to dawdle. Not much conviction in either direction.

We've already looked at the War on Poverty, the War on Drugs and the War on Terror.

So let's move on...using our new lens to look at another of the feds' fake wars.

Dirty War

No war was ever officially declared against the markets.

But for four decades the feds conducted covert operations...a dirty war in which they've tried to mislead, obstruct, and suppress market forces.

They used fake money, fake savings, and fake interest rates to confuse investors, businesses, and consumers.

They didn't say so directly, but their purpose was to give out false signals so that people would change their behaviour.

'Demand' was too weak, they said. What to do about it?

They flooded the system with phony savings (credit).

Price signals were distorted. Credit limits seemed to disappear. Debt limits were eased.

Then, in 2008, the war turned hot...with the feds actively and overtly holding down interest rates to push up stock and bond prices.

In response to the crisis they caused - by encouraging too much debt in the housing sector - they claimed that the 'free market' had failed.

They were just responding to the 'emergency', they said.

Soon, everybody got in on the act - expressing an opinion about how high (or low) interest rates should be.

Force and fraud

Believe it or not, an activist group called 'Fed Up' argues that raising rates is...you guessed it...racist!

Institutional Investor magazine reports that a group funded by 32-year-old Facebook cofounder Dustin Moskovitz is lobbying against rate increases on the grounds that higher rates are bad for US workers. From the website:

'The truth about the economy is obvious to most of us: not enough jobs, not enough hours, and not enough pay - particularly in communities of color and among young workers.

'Some members of the Federal Reserve think that the economy has recovered. They want to raise interest rates to slow down job growth and prevent wages from rising faster. That's a terrible idea.

'We stand with millions of workers and their families in calling on the Federal Reserve to adopt pro-worker policies for the rest of us. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize full employment and rising wages.'

What? Who are these people? Do they have tails? Horns?

They're right about one thing: When the Fed tries to control the economy, it is politics, not markets, at work.

Markets work by persuasion and voluntary exchange. Politics works on force and fraud. Fed Up is a political organisation trying to influence how the force and fraud is applied.

But let's look at the feds' War on Markets through our now-familiar scope.

Victory is impossible

First, is this a war the feds can win?

No. Of course not.

Markets can be suppressed, delayed, and denied...but never eliminated.

Markets do not stop working just because you try to bend, distort, and even outlaw them. Victory is impossible.

The market for drugs does not stop just because the feds make them illegal. Instead, they reprice illegal drugs, taking into account the increased cost of doing business.

Nor does poverty disappear just because the feds make war on it.

'The poor will always be with you,' said Jesus, wisely.

Wealth and poverty are relative; there will always be some rich and some poor. Passing laws will not change that.

And 'terrorism'?

Those who do not have access to conventional armies always resort to unorthodox attacks.

That's what American colonists did when they launched their war against the British in 1775.

It's what the Jews did when they launched their 'insurgency' against the British in Palestine in 1939.

And it's what the Maquis did during the occupation of France by the Nazis during the Second World War.

Terror won't stop any time soon. Nor will markets cease to function.

Bubbles, bankruptcies, and misery

Second, does the enemy gain strength from the 'war' against it?

Well, yes and no.

Markets work perfectly well whether you make war on them or not. Governments can put any price on anything they want. But only markets can tell you what they are worth.

Just look at what happened in the Soviet Union. Or China, pre-1979. Or Venezuela.

Who bought anything from China when the communists were setting prices?

Who goes to Venezuela to do his shopping today?

We visited Russia soon after the Soviet Union was disbanded. Markets were just opening up. But after 70 years of price fixing, there was almost nothing to buy. Almost everything that was being sold had been pilfered from the army. We bought a pair of boots for $1.00. We still have them. The soles are so stiff they barely bend.

There are really only two types of economies - command economies and market economies. The latter work for everyone - but you never know who the real winners will be. The former work only for the commanders. Then, when they have stolen everything there was to steal, markets reassert themselves.

Economies are price-discovering, information-generating learning systems. On the world market, every economy has access to the same resources, more or less. It's what you do with them that counts.

Dictating prices is like teaching students that Japan won the Second World War...or saying that two plus two equals five...or rounding off Pi to three just to make it easier to remember.

But the more fake information you give out, the more valuable real information becomes.

A war the feds will ultimately lose

Third, did it create a new, corrupt Deep State industry? And fourth, do the combatants on both sides gain as the public loses?

Not exactly.

This is different from other 'wars' announced by the Deep State. This is how the insiders fund their other wars...and how they shift trillions of dollars from the public to themselves.

The War on Markets distorted almost all industries and corrupted the entire economy.

As reported here many times, suppressed interest rates alone probably cost savers as much as $10 trillion since 2008. Goosing up asset prices probably shifted another $10 trillion or so to the people who own them (typically, the elite).

As in all of these fake wars, the casus belli is phony.

Markets do not hurt people; they help them. Price signals, set by markets, are essential. Otherwise, you don't know whether you're adding wealth or subtracting it.

Trying to suppress free markets or abolish them always leads to confusion, bubbles, bankruptcies, and misery. Economies weaken; people grow poorer.

Since 2008, wages have been stagnant or falling for most people...GDP growth has declined and is now probably negative...productivity growth has declined more than any time in the last 40 years...world trade levels are back to 2009 levels...and the bounce-back from the Great Recession was the weakest on record.

For now, the war serves its real purpose: to increase the power and wealth of the Deep State insiders.

But it is a war that the feds will ultimately lose.

Trying to suppress markets is like putting a giant cork in the mouth of a volcano. It doesn't stop the eruption; it just makes it more violent.

Regards,

Bill Bonner,

For The Daily Reckoning, Australia

End Bonner - Mish Start - Fed Up

Let's start with three truths by Bonner.

By Scutify

Source

Immigration advocates are praising Mayor Bill de Blasio's proposal for a municipal ID program.

In his State of the City address, de Blasio said that the city would make ID cards available to all New Yorkers.

That includes people who usually can't get other forms of identification, like the homeless and undocumented immigrants.

On Tuesday, the Center for Popular Democracy released a report analyzing similar programs in other cities.

Advocates say that the program could be a big help to vulnerable populations.

"Without this ID, it can be difficult to register to a child for school. It can be difficult to open a bank account. It can be difficult to even exercise your right to vote, to file a complaint with the police department," said Brittny Saunders of the Center for Popular Democracy.

"We also want to make sure that this card is available to multiple constituencies in this city," said City Councilman Carlos Menchaca of Brooklyn. "There's so many constituencies in this city that can benefit from this card, so we want to make sure that we know all those so we design the best cards that everyone has it."

Menchaca, who is the immigration chair for the City Council, also said that the Council plans to hold hearings in the next month about the best way to design the program.

Source

Washington Post - February 19, 2015, by Marc Fisher, Sandya Somashekhar, and Wesley Lowery - In the months following the shooting death of Michael Brown, Tony Rice quit his job to lead nightly protests in Ferguson, Mo. But after a grand jury decided in November not to indict the officer who shot Brown, Rice said, “we just woke up one morning and no one was out there protesting.”

That hasn’t deterred Rice. As the nation’s attention has turned elsewhere, he and fellow activists have switched up their tactics, slowing down and digging in, trying to nurture a nascent civil rights movement by shifting to local issues and a broader critique of American society.

The deadly confrontations in Ferguson; in Cleveland, where police shot and killed a 12-year-old boy who was playing with a pellet gun; and in New York, where police choked and killed a man who was selling loose cigarettes on the sidewalk, prompted young people to take to social media and the streets to express outrage and demand change.

The unrest generated by the deaths of Brown in Ferguson, Tamir Rice in Cleveland and Eric Garner in Staten Island may eventually become the first scene in a stirring saga of how a moment builds into a movement. Or it could end up as a cautionary tale about how a righteous activism born of traumatic incidents fizzles, the energy of dozens of new activist groups sapped by quotidian realities and the shortened attention spans of a society that expresses its political passions in Likes and tweets.

“To go from protesting to power, you need demonstrations, legislation and litigation,” said the Rev. Jesse Jackson, the veteran civil rights leader who has acted in recent months as an informal adviser and cheerleader for several new groups. “Sprinters burn out real fast. These young people need to be in it for the long run. And it must be an intergenerational coalition. A movement that’s mature requires clergy and lawyers and legislators. The struggle is never a one-string guitar.”

The new activists are still trying to tune their instrument. They are still figuring out whether to hew to local issues or go national. For the most part, the young protesters haven’t connected with elders such as Jackson or the Rev. Al Sharpton. They have uneasy relationships not only with civil rights fighters of generations past, but also with the black mayors and police chiefs who owe their own positions to the successes of that earlier activism.

All that adds up to a fractured puzzle composed of idealistic young activists who believe ordinary people can band together to make black lives matter more, but who haven’t yet figured out how to boost their generation into action.

In Ferguson, some activists moved from street actions to events such as “Books and Breakfast,” a giveaway featuring books such as “The New Jim Crow” and “I Love My Hair!” and free yogurt parfaits. One recent day, only a few dozen people stopped by, mostly familiar faces of hard-core activists.

Nonetheless, they talked about marching at a local high school where white students had said disparaging things about black protesters. The meeting ended with pleas from organizers to hug someone in the room and take another look at the books, half of which were left unclaimed.

Two days before the book event in Ferguson, the roads were slick in Cleveland, with heavy snow falling, as about a dozen activists gathered at the Unitarian Universalist Society in Cleveland Heights — a racially and economically mixed suburb up the hill from downtown.

The meeting, called by a local activist group called Puncture the Silence, was an effort to press beyond the squabbles and rivalries that have plagued the protest groups that emerged after the Rice shooting. Although protests have continued almost weekly in Cleveland through a harsh winter, the wait to hear whether the officers involved in the shooting will face criminal charges has left many activists frustrated, splintered by arguments over strategy, objectives and media posture.

Some want more marches, sit-ins and disruptive protests. Others propose to stage a tribunal, rendering an extrajudicial verdict in several cases of police use of force. Still others want a focus on policy, but what should they demand? Body cameras? Special prosecutors? Police training? Collective bargaining?

“We need to keep the direct pressure on elected officials, but we also need to stay active in the streets,” Rachelle Smith, 31, who has been a key player among Cleveland’s young protest groups since the Rice shooting, told the group.

The next move after expressing anger in the street is often the hard part for new civil rights groups. Do they seek changes in the law? Push to elect sympathetic candidates? Focus on winning over those who aren’t yet on their side? Or pull back from the moment and get radical, pressing for wholesale social change?

In Ferguson, many of the more than a dozen organizations that formed in the tear-gas clouds of August fragmented over the course of the fall. Conflicts flared over organizers who spent much of their time honing their profile on Twitter and attending an endless series of conferences on activism. Members of some new groups grumbled about leaders who seemed more interested in scoring airtime with Don Lemon on CNN or winning donations from wealthy celebrities than about recruiting poor people to their cause.

On the night of the grand jury’s decision not to indict Officer Darren Wilson in the Brown shooting, Tory Russell and other members of a new civil rights group called Hands Up United knew one thing they had to do: Race to their office to fend off vandals and prevent violence.

Today, six buildings across from the group’s original office remain boarded up. The Metro PCS shop is a blackened heap; a steel bar bears a slogan written in rust: “America Wake Up!”

Hands Up United has moved to a new location but isn’t going away, said Russell, a burly man with a thick beard who wears his devotion to the movement on a T-shirt emblazoned with the first names of young African Americans whose deaths have fueled this fight — Trayvon, Mike, Eric . . .

By the time Brown was killed, Russell, 30, had already dropped his plan to become a teacher — a dream he traces to his days in the library at Sumner High School in St. Louis, alma mater of Chuck Berry and Tina Turner. Today, Russell views his old school as dominated more by in-school suspension than reading books, so he has focused his political work on distributing books on black history and radical politics.

He sees a surer path to change at the neighborhood level than in any effort to win nationwide notice. “And now the real work begins,” Russell said. “You can complain about the system being bad and how it affects the community. But if your room is dirty, you’re going to have to pick up the clothes and wash the dishes. And that’s what we’re doing.”

Hands Up’s leaders haven’t lost sight of the issue of police brutality: “We still believe the ultimate piece of the narrative is that unarmed people are being killed by police,” said Tef Poe, 27, a rapper from St. Louis who started the group with Russell.

But since the TV cameras left town, the heady camaraderie of those first weeks has given way to infighting and a struggle for attention.

Poe joined other organizers on a trip to the Palestinian territories last year and he recently returned from the Sundance Film Festival — decisions that have raised questions among some activists about how groups are spending the hundreds of thousands of dollars that have come in from foundations and ordinary people who hit “donate” buttons online.

Poe and Russell said they are not getting paid by Hands Up. Neither was sure of the exact size of the organization’s budget. Hands Up United — which like many of the new groups has not established nonprofit status of its own — has received organizational help from a group connected with the California antiwar nonprofit known as Code Pink.

Russell said Hands Up United, unlike other groups that flared on TV and Twitter and then disappeared, is in it for the long run. “For some people, when it wasn’t sexy anymore, when CNN left, it died down for them,” he said. “What we’re doing is not hashtag activism, this is actually community organizing. I’ve never seen hashtags change my community.”

Athousand miles away, Hands Up United’s shift in focus from civil disobedience to community development — from leading rallies to giving out books — sounds familiar to Phillip Agnew.

The group he founded in 2012 — after a former neighborhood watch volunteer shot and killed Trayvon Martin, an unarmed black 17-year-old in Sanford, Fla. — had a two-year head start on those that have emerged in Ferguson and Cleveland. Agnew’s Dream Defenders have been through it all: the rush of the marches, a 31-day sit-in in the state capitol, confrontations with the powerful, promises that they would be listened to, frustration when nothing changed.

Now, on the same day that Hands Up United gives out books in Ferguson, Agnew’s Dream Defenders stage a multicultural festival in front of a sprawling, brightly colored mural of Haitian village life in Miami’s Little Haiti neighborhood. The attractions includesalsa dancing and African drumming; speeches in English, Spanish and Creole; testimonials from farmworkers and college students — all spiced with gentle reminders of the need to do something about the number of young people from Miami’s crazy quilt of impoverished communities who drop out of school, land in prison, or subsist without career or much hope of one.

The Dream Defenders — the name refers to the effort to build on the Rev. Martin Luther King Jr.’s legacy — started out demanding the repeal of Florida’s “stand your ground” law, which allows people to use deadly force if they feel threatened by another person. But after their sit-in failed to persuade Gov. Rick Scott (R) to call a special session of the legislature to reconsider the law, Agnew and his fellow Defenders concluded that they needed to move on to “the next phase.”

What that would look like took many months to decide. Agnew — at 29, he is thoughtful yet blunt, insisting on talking about fomenting revolution even when his older advisers counsel more moderate rhetoric — said he was initially distracted by the celebrity that came with being a prominent activist.

“It was very easy to accept invitations all over the country,” he said. “It’s very, very, very alluring and seductive to have folks know you and to go to conferences and workshops every week. I was in Time magazine, on television all the time — it does begin to create some kind of friction within the organization. And then you look up and feel like we haven’t gotten anywhere. We had to pump the brakes.”

Some other groups that formed after Martin was killed have left Florida and are trying to find traction on a nationwide scale. The Million Hoodies Movement for Justice was started by a young Floridian, but its leaders are now spread around the country, active mainly through video and social media.

“Nobody’s going to have their political beliefs changed on Facebook, but it is a way for us to connect,” said Peter Haviland-Eduah, the group’s spokesman, who lives in Michigan, where he is in graduate school. “We want to build coalitions across the country, and we have to find small, tangible wins. The civil rights movement in the ’60s was about changing laws and they had tangible goals, like getting more folks to register to vote. We’re about changing the consensus, changing beliefs, and that’s much more difficult.”

The Dream Defenders concluded that the only way forward is to embed themselves in local issues. “It’s a big mistake for these groups in Ferguson and other places to go national,” said Sherika Shaw, 26, the group’s South Florida coordinator, who left a graduate program in art education after learning about Dream Defenders on Instagram. “The people are here, where you are. It’s not about changing policy; you can’t use the master’s tools to destroy the master’s house. We don’t want to be the people the TV networks call; we want to be who the people call instead of the police when there’s a domestic dispute.”

Shaw spends her days trying to establish Dream Defenders groups in local high schools, appealing to teens to speak out against having uniformed security officers on their campuses.

The group’s core members lived for a time in a borrowed house in the lush suburb of Miami Lakes — the dream house, they called it — allowing them to talk and plan around the clock. They lived on Agnew’s credit card and his savings from four years he spent selling erectile-dysfunction and anti-depression drugs for a pharmaceutical company in North Carolina.

They studied past movements, read history and made two defining decisions: Unlike many other new groups, they would stay local, rooting themselves in Florida’s problems and people. And they would get radical, spurning elective politics and emphasizing their belief that the persistent poverty and social immobility in many black communities result not from specific policies but from the very nature of capitalism and racism.

On one morning in early February, Agnew arrived at work angry because he woke up to a flat tire on his car. “This system of capitalism creates a lot of stress around money,” he said. He put on his black “People Over Money” T-shirt and began another day of trying to convince blacks and Hispanics that the problem they see as police brutality is really far deeper.

“A community that just lost someone to a police shooting may not be ready to hear that,” he said. “They may not have that language. But if we talk to them about what they experience — being ignored, being invisible, the contempt for black people, the contempt for poor people — they begin to see that this is much larger.”

At the street festival, which draws about 150 people over the course of the afternoon, Shamile Louis, the 23-year-old daughter of Haitian immigrants, tries to get that message across. Louis, who has worked with Dream Defenders since her junior year in college, recalls watching George Zimmerman’s trial in Martin’s shooting on TV every day; when he was acquitted, “my soul was shattered,” she said. She spent 27 days at the sit-in at the capitol in Tallahassee. But although she’s still committed to the cause, the realities of surviving are pulling her away from full-time activism.

“I’m going to have to find work,” she said. “The movement is really struggling. We were really amped up at the capitol. The reality now is people have real lives and have to work.”

She spent part of the afternoon at the Dream Defenders table in the center of the courtyard. By day’s end, only six people have signed cards expressing interest in the group’s work.

Jesse Jackson came to Tallahassee to join the Dream Defenders in their sit-in. Sharpton shuttled into Ferguson to lead marches and rustle up media attention. Black clergy and leaders of traditional civil rights groups reached out to the new groups, offering advice and organizational support.

And in December, Agnew and six other leaders of new groups met at the White House with President Obama, who told them he would set up a task force to address the “simmering distrust” between police and African Americans. Agnew came away from the meeting convinced that protest groups must become more radical because change will not come from those already in power.

“The concessions won by the civil rights movement in the ’60s are our biggest obstacle,” he said. “We have black Fortune 500 CEOs, an African American president, African American mayors and chiefs of police, and still the lot of black people, Latino people, has not risen.”

Dream Defenders, which has a minimally paid staff of seven, works largely off a $200,000 grant from the Tides Center, a San Francisco-based foundation that supports groups seeking social change. Agnew said he expects the Tides money to dry up eventually “because in the end, we’re going to be too radical for them.”

In Cleveland, the mayor, police chief and much of the City Council are black, as are many influential pastors. But some young black activists say their fight puts them squarely at odds with the city’s black power structure.

“As an African American guy trying to make a difference, I am fighting the white establishment, and I’m also fighting the black establishment,” said Alonzo Mitch­ell, an organizer who hosts a local radio show and is a regular at council meetings.

When Mitchell, 33, approached a city official to seek backing for a mentorship program for future political leaders, he says he was told: “No one is going to teach you. Power is never given, it’s taken.”

On the city’s west side, below the modest Guide to Kulchur bookstore, an expansive basement meeting room has become the headquarters of an activist collective determined to change how Cleveland police operate.

In the basement one recent afternoon, activists peppered half a dozen council members with demands, insisting that each official complete a report card, answering yes or no to statements such as “The officer who killed Rice should be immediately indicted.” All but one of the council members in attendance said they favored an indictment.

When protesters planned a march after the Rice shooting, Police Chief Calvin Williams volunteered to shut down parts of a highway. Commuters griped about the protests impeding traffic, but Mayor Frank Jackson said “that’s the inconvenience of freedom.” Cleveland police officers working at demonstrations conversed and joked with protesters, a strikingly different approach from officers in St. Louis, who met similar protests with riot gear, tear gas and rubber-coated bullets.

Despite such efforts at cooperation, pressing for change is harder in cities with black elected officials, some veteran civil rights leaders say.

“It is more difficult to organize against a black power structure,” said Lawrence Hamm, 61, who formed the People’s Organization for Progress in Newark in 1983 after a police shooting of an unarmed black man. “You might be marching against a popular black mayor, and it’s going to be harder for you to get people to join you.”

The new groups need help from the old-line black civil rights groups they sometimes view as having sold out, Hamm said: “The black radical organizations — the people who want more fundamental change — are not going to be strong enough to get there on their own.”

Although Hamm’s group still agitates for police overhauls, its founder long ago realized he needed to work both with elected officials and with older, mainstream organizations.

“We formed our group because we felt the traditional civil rights groups were not aggressive enough,” said Hamm. “But now, I belong to three branches of the NAACP.”

Three decades after Hamm set out to be more in-your-face than the black organizations of his parents’ generation, Ciara Taylor, the 25-year-old political director of Dream Defenders, found her way to a more radical path by volunteering in Obama’s 2008 campaign.

Knocking on doors in Vero Beach, Fla., she was called the n-word and confronted with the reality that a black senator’s candidacy for president “does not make race go away,” she said. “There was a great hope within my generation and within me that we could be free of racial identification, but we realized that race does not go away.”

But it took a one-two punch three years later to propel her into full-time activism: In her senior year at Florida A&M University, the school proposed to eliminate her major, Spanish language; she switched her concentration to political science and joined a campaign to reverse the cutbacks. A few months after that, when Martin was killed, Taylor, daughter of a corporate manager and a career Navy officer, felt jolted from her middle-class trajectory.

“Being a young person, you’re impatient,” she said. “You see these trigger moments happen and you automatically want to fight the big beast that our parents tried to protect us from.”

Now, two years into her life as an organizer, Taylor bristles at the notion, expressed by some veterans of the 1960s movement, that the new activism is dissipating. “A lot of the older generation looks at movement work as physically being at a protest,” she said. “That’s important, but a more radical expression of social engagement is simply choosing to love yourself in a society that tells you you look like a thug or your nose is too big.”

When Taylor sees new groups fading away, she doesn’t take that as a defeat, but as a sign that people are “caring for themselves. The fact that a lot of movements are disintegrating comes from the inability to care for oneself, especially mothers with families.”

Ferguson remains a hive of activism. For the first time, the Organization for Black Struggle, which grew out of the Black Power movement of the 1970s and ’80s, has enough money to pay six staff members, thanks to support from individuals and progressive groups such as the Center for Popular Democracy, Color of Change and the Open Society Foundations, which was founded by liberal billionaire investor George Soros.

Seven months ago, Charles Wade was adjusting scarves and trimming hems for Hollywood stars. Now he’s in St. Louis, where the former image consultant to Solange Knowles, Beyoncé’s sister, is alone, in black sweats, scrubbing the floor of a townhouse that is part of a transitional housing program he has set up through his new organization, Operation Help or Hush.

It’s been a trying few days. His asthma was acting up. A protester he’s been housing lost Wade’s credit card while out buying supplies. And on Twitter, he’s dealing with a protester who questioned his funding, his newfound fame as an activist and his devotion to the cause.

“It’s really demoralizing that you have to fight so hard just to do something decent for people,” Wade said.

Immediately after the Brown shooting, Wade, a native of Bowie, Md., started raising money on Twitter to provide food, housing and even expense money for protesters who paused their lives to go into the streets. He raised $25,000 in one week. On one occasion, after putting out a call on Twitter for help for protesters who needed gas money, Wade stood in the parking lot of Andy Wurm Tire & Wheel handing out $20 bills.

Since grand jurors decided not to indict Wilson, many activists have scattered. Wade stayed. He still expects to house 27 new activists by April, and he’s raising money through Twitter and from friends and family.

He’s determined to keep going, he said; there’s so much more to do: “There’s very little we’ve actually gotten for Ferguson except for it to be known nationally.”

Source

In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added years will be a time of uncertainty and dependency rather than leisure.

Connecticut is the latest state seeking to stave off this looming crisis in elder poverty, passing legislation to provide access to a state-sponsored retirement plan for the 600,000 Connecticut residents who do not have a plan through their employers. The bill will automatically enroll workers in businesses with five or more workers in a retirement plan overseen by a new quasi-public authority. Connecticut joins California, Illinois, and more than a dozen other states pushing for state-sponsored plans to encourage workers to save for retirement.

The accelerated pace of activity follows decades of wage stagnation that have left the average American worker with just half of what workers saved in the 1970s. Half of those nearing retirement have no retirement savings at all and those that do have savings have only enough to provide a median income of around $400 per month.

At the same time, employers have largely abandoned defined benefit pension plans that once guaranteed a minimum level of security based on salary and length of service, opting instead for plans that put the onus on workers to build up their own retirement accounts. Today, more than half of American workers have no private pension coverage at all.

Those who retire without a pension or sufficient savings will depend largely on Social Security for their retirement income, a system that will grow increasingly burdened as baby boomers retire, leaving fewer workers to cover the costs of each retiree.

This daunting reality has spurred states like Connecticut to act.

Innovation at the state level, however, is currently hindered by the federal Employment Retirement Security Act (ERISA), which generally preempts state action on private sector pensions. State legislatures have had to build language into bills making any plan contingent on an exemption from federal ERISA requirements. This burden creates uncertainty for both workers and state administrators, preventing many states from even exploring the possibility of a plan.

In response, the Department of Labor (DOL) is currently developing a safe harbor rule that would clarify how states can bypass ERISA requirements. The rule would let states develop the retirement security model that best suits their residents, while also learning from the successes and missteps of other state plans.

While the proposed DOL rule is a great first step, it does not go far enough in its present form. The rule is limited to states, but cities such as New York are also considering similar plans. They should be afforded the same opportunity to ensure a secure retirement for their residents.

In developing its rule, the DOL should aim to reach the largest possible number of workers, including those whose state legislatures are unable or unwilling to address retirement security. Including cities also allows for more tailored programs when demographics and industries vary widely across a state.

Preventing an elder poverty crisis will require creative solutions at all levels of government. The DOL should ensure that federal regulations foster that creativity, rather than stifle it.

By ANDREW FRIEDMAN

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