Tag Archives: financial planning

One of the Oldest Rules for Retirement Saving Is Wrong, Experts Say. Here’s the Fix

My Comments: It’s Thursday when I post about RETIREMENT.

You’ve heard me say time and again that retirement planning needs to assume one of you (if you have a spouse) is going to be around until age 100. And in every one of those years between now and then, everything you buy will increase in price.

The only way to offset that need for additional funds is to have money invested in the stock market. Don’t count on extra money from Social Security. Don’t count on your bank steadily increasing the interest rate on your Certificates of Deposit.

by Elizabeth O’Brien \ May 1, 2018

You know that old rule of thumb to subtract your age from 100 to get the percentage of your portfolio that should be in stocks? Well as they say in Brooklyn, fuhgeddaboudit!

“You should not robotically reduce your equity allocation because you’re getting older,” says Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments. Instead, most investors should pick a stock percentage that feels comfortable and keep it constant throughout retirement, experts say.

The old rule might have made more sense back when people weren’t living as long. Today, many investors will need their portfolios to last well into their 80s, 90s and even beyond. And you’re not going to get much-needed growth if you stay too cautious with stocks.

Target-date funds are growing in popularity. At the end of 2016, nearly half of all Vanguard investors were invested in a single target date fund — and those with the bulk of their savings in one of these vehicles may be too conservatively invested without realizing it. Designed to be a one-stop-shop for investors, these funds adjust your asset allocation for you and become more conservative as retirement approaches. Once they reach the target year, “the vast majority of target-date funds hit a low [stock] percentage and just stay there,” says Jamie Hopkins, professor of retirement planning at the American College of Financial Services and author of Rewirement: Rewiring The Way You Think About Retirement.

So how much equity exposure is right in retirement? The exact answer will depend on your circumstances, and on who you ask. Weiss says the sweet spot for stocks in retirement is between 35% and 55% of the overall portfolio. People with healthy nest eggs, which he defines as containing at least eight times your ending salary, can afford to stick to the lower part of that range, since their portfolios don’t need to generate as much growth, he says.

Those with inadequate savings should consider sticking to the higher part of the range. Stocks can be volatile over the short term, but over the very long term they have historically delivered positive returns. The Standard & Poor’s 500 has not returned less than inflation during any rolling 40-year period, according to an analysis by personal finance site Don’t Quit Your Day Job. The best rolling 40-year returns were 10.3% annualized after inflation, according to the site. You’re generally not going to find such consistent growth with other assets, such as bonds, real estate, or gold.

Of course, stocks can decline over the short term, and the risk of a downturn is why you don’t want to put all your eggs in the equity basket. It’s also why many financial advisors suggest that retirees keep at least three-years’ worth of expenses in cash or cash equivalents, such as a short-term bond fund, so that they can weather a bear market without having to withdraw from their stock portfolio.

Once you’ve decided on a comfortable stock allocation, you shouldn’t fiddle with it much, if at all. If market volatility keeps you up at night, that’s a sign that you didn’t set the right allocation to begin with, Weiss says. Many investors have been conditioned to use their age as a proxy for their risk tolerance, but in reality, Weiss says, “It’s wealth, not age.”

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When Is The Next U.S. Recession And Bear Market?

My Monday Comments: All my clients, at least those who haven’t left me for greener pastures, are all concerned about the future of their money. Like me, most of them are going to need their money to pay bills as their years unfold. Losing a big percentage in a market crash makes us nervous.

In my files I have an article dated July 30, 2016 by Jeffrey Gundlach where he yells “SELL EVERYTHING”. In retrospect that would have been a terrible idea. But the headline above still resonates since we know it’s coming sooner or later.

This is long and a little technical so if you are not inclined to worry about it much, you can stop here. On the other hand if you want to explore further, be my guest.

by Jesse Colombo, September 14, 2018

It’s been a decade since the Great Recession, so the obvious question that is now on many people’s minds is “when is the next recession and bear market”? As someone who is warning about a dangerous stock market bubble, I am asked this question quite frequently. Unfortunately, it is impossible to predict the timing of future economic events with a high level of detail and accuracy such as “the market will top on April 17th, 2019” or “the recession will begin in August 2020”, but there are certain tools that help to estimate where we are in the economic cycle. In this piece, I will discuss the U.S. Treasury yield spread and yield curve and how it is useful for estimating the approximate time frame when the next recession and bear market may occur.

Let’s start with a quick explanation of the Treasury bond yield curve: in a normal interest rate environment, bonds with shorter maturities have lower yields, while bonds with longer maturities have higher yields to compensate for the greater risk incurred when holding for a longer period of time (primarily default and inflation risk). The chart below shows an example of a normal yield curve. A normal yield curve takes shape early on in the economic cycle and lasts for the majority of the cycle. A normal yield curve is usually a sign that the bull market in stocks has further to run.

As an economic cycle matures and the Federal Reserve has raised interest rates quite a few times, the yield curve flattens (see the chart below for an example). The Fed controls the short end of the yield curve, and their succession of rate hikes causes the short end to catch up with the longer end. A flat yield curve is a signal to investors that the bull market is “middle aged” – no longer young, but not quite ready to die just yet.

Your 2018 Tax Guide

With all the recent attention from tax changes made by Congress recently, many of us are wondering how it will affect us. Here’s something you might find is useful. Just remember I’m not licensed or qualified to give tax advice so this is information only.

It comes from an insurance company called Athene. Technically, their full name is Athene Annuity and Life Company. They are my current company of choice when it comes to shifting some of your retirement reserves into a protected place.

Much of the money you have should be exposed to the markets so it will grow and be there in the future when you need it to pay bills. But in the meantime, you need a way to protect or insure yourself against a market crash. The insurance ‘policy’ or contract that I consider the best possible one on the market comes from Athene.

If you click on the ‘tax’ image just above, you can download a copy and save it somewhere as reference material.

 

Why Britain needs the immigrants it doesn’t want

My Comments: As someone born on British soil, I am more than casually interested as Britain comes to terms with it’s choice to leave the European Union. Immigration is but one of several areas with huge economic implications for Britain in the coming years.

There are parallels between what is expressed in this article by Ivana Kottasova and what the United States is moving toward in terms of immigration. The immigration fault lines in this country and the efforts of the current administration to curtail immigration will significantly influence the economic well being of your children and grandchildren in the years to come.

by Ivana Kottasová / Oct 18, 2017

Britain has a problem: It wants fewer immigrants, but its economy desperately needs more.

The British government is seeking to slash the number of immigrants from the European Union following its departure from the bloc in March 2019.

It’s planning tougher controls despite warnings that more EU workers are needed to harvest the country’s crops, build homes for its citizens and build its next startup.

The risks are especially pronounced in health care.

The National Health Service says there are over 11,000 open nursing jobs in England, and another 6,000 vacant positions across Scotland, Wales and Northern Ireland.

The overburdened system, described by the British Red Cross as facing a “humanitarian crisis,” already relies on 33,000 nurses from the EU.

“We would describe the NHS as being at the tipping point. There are huge staffing problems,” said Josie Irwin, head of employment at the Royal College of Nursing. “Brexit makes the situation worse.”

Jason Filinras, a 29-year old from Greece, was recruited last year to work as a front line nurse at a hospital just north of London.

Filinras joined the hospital’s acute admissions unit, where he runs tests and determines how to treat patients after they have been stabilized in the emergency room.

“If you have a patient who is not able to take care of themselves, you have to do all the basic things for them — from helping them with washes, helping them with toilet, feeding them,” he said.

Heis just one of 250 nurses recruited from the EU by the West Hertfordshire Hospitals Trust over the past two years to work in its three hospitals. EU citizens now make up 22% of its nursing staff.

The trust didn’t have a choice. The unemployment rate is at its lowest level in four decades, and there simply aren’t enough British nurses.

The shortage of workers cuts across sectors — from agriculture to education — and across skill levels. There aren’t enough fruit pickers and there aren’t enough doctors.

The political impetus to reduce immigration from the EU can be traced to 2004, when Britain opened its borders to workers from eight eastern European countries that had joined the bloc.

Government officials expected 5,000 to 13,000 people from the countries to come to Britain each year. Instead, 177,000 came in just the first year.

Critics say that increased immigration has changed the fabric of local communities, and undercut the wages of British workers.

It’s an argument that has currency with voters. Immigration was the most important issue for voters ahead of the Brexit referendum in June 2016, according to an Ipsos Mori poll.

Theresa May, who became prime minister in the wake of the EU referendum, has promised to bring annual net migration below 100,000. The figure was 248,000 in 2016.

It had been difficult to meet the target because EU rules allow citizens to move freely around the bloc. May says that Brexit will mean an end to free movement.

“The government is putting politics above economics, which is quite a dangerous game,” said Heather Rolfe, a researcher at the National Institute of Economic and Social Research.

Labor economists say that a radical decline in immigration would hurt the British economy.

The Office for Budget Responsibility, the government’s fiscal watchdog, said that 80,000 fewer immigrants a year would reduce annual economic growth by 0.2 percentage points.

“To lose these people would be pretty tough and it would mean that some sectors might find it very difficult to survive,” said Christian Dustmann, professor of economics at University College London.

Some EU workers, upset over political rhetoric and a lack of clarity about their legal status, are already leaving Britain. Net migration from the EU fell to 133,000 last year from 184,000 in 2015, according to the Office for National Statistics.

The impact is already being felt: The Nursing and Midwifery Council said that roughly 6,400 EU nurses registered to work in the U.K. in the year ended March, a 32% drop from the previous year. Another 3,000 EU nurses stopped working in the U.K.

“It’s all this uncertainty that will make us leave,” said Filintras. “I can’t say that I am 100% sure that I won’t think about leaving.” If he does move home, he will be hard to replace.

Irwin said the British government has made it less attractive for new British nurses to enter the profession by scrapping college scholarship programs and capping salaries. Applications for nursing courses are down 20% as a result.

Nurses make an average of £26,000 ($34,600), while German supermarket chain Aldi offers college graduates a £44,000 ($58,500) starting salary and a flashy company car.

Trouble also looms in other sectors.

A third of permanent workers supplying Britain with food are from the EU, according to the Food and Drink Federation.

The British Hospitality Association, which represents 46,000 hotels, restaurants and clubs, has warned that the sector faces a shortfall of 60,000 workers a year if the number of EU workers is sharply curtailed.

KPMG estimates that 75% of waiters and waitresses and 37% of housekeeping staff in Britain are from the EU. British farms are heavily dependent on seasonal workers from the bloc.

“If you cannot harvest your strawberries anymore … then supermarkets might buy the strawberries directly from Poland,” said Dustmann.

Business groups and labor unions have repeatedly called on the government to moderate its negotiating position. But May has shown no signs of backing down.

“The government is interpreting the vote to leave the EU as a vote against immigration … and to some extent that is true,” said Rolfe.

Boston, a town on the east coast of England, shows why: According to census data, the town’s foreign-born population grew by 467% in the decade to 2011. In 2016, the town had the highest proportion of voters choosing to leave the EU.

How to Get Medicaid for Nursing Home Care Without Going Broke

My Comments: Politicians apparently have no earthly idea what getting old does to your finances. Of the 50 state Medicaid directors, red states and blue states, all 50 came out in opposition to the most recent attempt by Congress to repeal the ACA or ObamaCare.

None of us are willing to allow the elderly to die in the streets for lack of care. That means programs like Medicaid must be properly funded.

We can argue till the cows come home about the need for rules to prohibit unfair advantages and you’ll get my approval for such rules. There will be competing agendas but does that mean we should give up?

And somehow, these rules must be written to allow intelligent financial planning. Rules that include how to be cared for without losing your financial sanity. Gabriel Heiser’s ideas have value for all of us.

Gabriel Heiser 9/21/2017

Well-off people can easily go broke paying for sky-high nursing home care: First they deplete their own funds and then, eventually needing Medicaid, spend down nearly all the rest of their assets to qualify for that government program designed for low-income individuals.

The way to avoid this terrible situation is to put in place a Medicaid asset-protection plan early on. One powerful solution is to buy a single-premium immediate annuity, says attorney K. Gabriel Heiser, an elder care Medicaid expert, in an interview with ThinkAdvisor.

For 25 years, Heiser focused exclusively on elder law, and estate and Medicaid planning. He is author of “How to Protect Your Family’s Assets from Devastating Nursing Home Costs: Medicaid Secrets” (Phylius Press 2017-11th updated edition).

Sixty percent to 70% of nursing home patients are on Medicaid, says Heiser.

In determining eligibility, Medicaid differentiates sharply between “assets” and “income.” The potential Medicaid recipient is permitted to have only $2,000 in assets, though they can still receive certain income under certain circumstances.

In the interview, Heiser discusses a number of techniques — all of them legal — to shelter or reduce assets to qualify for nursing-home Medicaid.

One of the best, he says, is a so-called Medicaid-Friendly annuity, which essentially converts “countable” assets into income, which is exempt.

The average cost of nursing home care is $92,000 a year and much higher in New York and Hawaii, among other states. The average stay is two-and-a-half to three years. Care for a person with Alzheimer’s disease in a locked unit can come to more than $450,000 annually and is typically for a period of at least five years, Heiser says.

Though Medicaid wasn’t created for middle-class people “to pass their money on to their children at taxpayers’ expense,” Heiser writes, he reasons that it makes sense and isn’t unethical to “avail yourself of the laws” in order to minimize expenditures on nursing home care and indeed “pass those savings on to your children.”

Most folks make the mistake of waiting too long to plan for asset protection, says Heiser. They should begin at the first sign that their spouse, parent or sibling likely will need nursing home care.

Heiser was formerly chair of the estate planning committee of the Massachusetts Bar Association and an adjunct professor of the College for Financial Planning at David Lipscomb University. A professional version of his book, “Medicaid Planning: From A to Z,” is directed at attorneys, financial advisors and CPAs.

ThinkAdvisor recently spoke with the semi-retired Heiser, 68, on the phone from home in San Miguel Allende, Mexico. He revealed some of his Medicaid secrets and how they can help clients shelter their assets. Here are highlights:

THINKADVISOR: What’s critical to know about Medicaid?

GABRIEL HEISER: To qualify, you can’t have more than $2,000 in Medicaid-countable assets. So if you have cash in the bank or any other assets that aren’t on the exempt list, they’ll count toward the $2,000. That’s not a very high amount — but the point of Medicaid is that it’s supposed to cover the poor.

You write that hiding money and not reporting an asset on a Medicaid application is fraud.

Yes, fraud against the government. You’ll be disqualified for Medicaid, and there are also criminal penalties.

What about having income?

You can still qualify if you have, say, pension income. But there’s a cap of $2,205 a month for Medicaid recipients. However, some states have a rule that if your income is over that figure, you can direct your Social Security or pension into a trust — a Miller Trust, also known as a Qualified Income Trust.

The trustee pays the money to the nursing home, and Medicaid pays the difference. Typically, the bills are going to be more than $2,000 a month. So even though you have income over the cap, you can still qualify by setting up that trust.

Note: there are three more pages of Gabriel Heiser’s words of wisdom on this topic. To read the rest, click HERE.

X Marks the Spot Where Inequality Took Root: Dig Here

My Comments: You’ve heard me say that income inequality is the greatest existential threat to our society going forward. If we allow the disparity between the haves and the have nots to become wider and wider, it’s only a matter of time before chaos will reign.

People want what money will buy. Companies will manufacture and produce what people want to buy. But if you allow the want to overwhelm the ability to pay for it, it’s only a matter of time before chaos will reign.

In order to survive, companies will find ways to cut costs, not just to increase profits, but to assure they remain competitive in a shrinking market place.

But the trajectory is not infinite; sooner or later they will stop manufacturing and producing stuff if there aren’t enough buyers to justify the fixed costs.

How many hat makers are there these days compared with 100 years ago? I grew up in a time when every male owned a hat. I had one when I was in high school. When was the last time you saw a male person wearing a dress hat when entering a restaurant or going to church?

We need to identify who, among our future political leaders, those who understand economics. It’s not about empowering the existing poor; it’s about making sure there are enough of us with money left to spend.

by Stan Sorscher \ August 5, 2015

In 2002, I heard an economist characterizing this figure as containing a valuable economic insight. He wasn’t sure what the insight was. I have my own answer.

The economist talked of the figure as a sort of treasure map, which would lead us to the insight. “X” marks the spot. Dig here.

The graphic below tells three stories.

First, we see two distinct historic periods since World War II. In the first period, workers shared the gains from productivity. In the later period, a generation of workers gained little, even as productivity continued to rise.

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70’s to de-couple wages from productivity gains.

The third message is that workers’ wages – accounting for inflation and all the lower prices from cheap imported goods – would be double what they are now, if workers still took their share of gains in productivity.

A second version of the figure is equally provocative.

This graphic shows the same distinct historic periods, and the same sharp break around 1975. Each colored line represents the growth in family income, relative to 1975, for different income percentiles. Pre-1975, families at all levels of income benefited proportionately. Post-1975, The top 5% did well, and we know the top 1% did very well. Gains from productivity were redistributed upward to the top income percentiles.

This de-coupling of wages from productivity has drawn a trillion dollars out of the labor share of GDP.

Economics does not explain what happened in the mid-70s.

It was not the oil shock. Not interest rates. Not the Fed, or monetary policy. Not robots, or the decline of the Soviet Union, or globalization, or the internet.

The sharp break in the mid-70’s marks a shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.

Let’s go back before World War II to the Great Depression. Speculative unregulated policies ruined the economy. Capitalism was discredited. Powerful and wealthy elites feared the legitimate threat of Communism. The public demanded that government solve our problems.

The Depression and World War II defined that generation’s collective identity. Our national heroes were the millions of workers, soldiers, families and communities who sacrificed. We owed a national debt to those who had saved Democracy and restored prosperity. The New Deal policies reflected that national purpose, honoring a social safety net, increasing bargaining power for workers and bringing public interest into balance with corporate power.

In that period, the prevailing social contract said, “We all do better when we all do better.” My prosperity depends on your well-being. In that period of history, you were my co-worker, neighbor or customer.

Opportunity and fairness drove the upward spiral (with some glaring exceptions). Work had dignity. Workers earned a share of the wealth they created. We built Detroit (for instance) by hard work and productivity.

Our popular media father-figures were Walter Cronkite, Chet Huntley, David Brinkley, and others, liberal and conservative, who were devoted to an America of opportunity and fair play.

The sudden change in the mid-70’s was not economic. First it was moral, then social, then political, ….. then economic.

In the mid-70’s, we traded in our post-World War II social contract for a new one, where “greed is good.” In the new moral narrative I can succeed at your expense. I will take a bigger piece of a smaller pie. Our new heroes are billionaires, hedge fund managers, and CEO’s.

In this narrative, they deserve more wealth so they can create more jobs, even as they lay off workers, close factories and invest new capital in low-wage countries. Their values and their interests come first in education, retirement security, and certainly in labor law.

We express these same distorted moral, social and political priorities in our trade policies. As bad as these priorities are for our domestic policies, they are worse if they define the way we manage globalization.

The key to the treasure buried in Figure 1 is power relationships. To understand what happened, ask, “Who has the power to take 93% of all new wealth and how did they get that power? The new moral and social values give legitimacy to policies that favor those at the top of our economy.

We give more bargaining power and influence to the wealthy, who already have plenty of both, while reducing bargaining power for workers. In this new narrative, workers and unions destroyed Detroit (for instance) by not lowering our living standards fast enough.

In the new moral view, anyone making “poor choices” is responsible for his or her own ruin. The unfortunate are seen as unworthy moochers and parasites. We disparage teachers, government workers, the long-term unemployed, and immigrants.

In this era, popular media figures are spiteful and divisive.

Our policies have made all workers feel contingent, at risk, and powerless. Millions of part-time workers must please their employer to get hours. Millions more in the gig economy work without benefits and have no job security at all. Recent college graduates carry so much debt that they cannot invest, take risk on a new career, or rock the boat. Millions of undocumented workers are completely powerless in the labor market, and subject to wage theft. They have negative power in the labor market!

We are creating a new American aristocracy, with less opportunity – less social mobility and weaker social cohesion than any other advanced country. We are falling behind in many measures of well-being.

The dysfunctions of our post-1970 moral, social, political and economic system make it incapable of dealing with climate change or inequality, arguably the two greatest challenges of our time. We are failing our children and the next generations.

X marks the spot. In this case, “X” is our choice of national values. We abandoned traditional American values that built a great and prosperous nation. Our power relationships are sour.

We can start rebuilding our social cohesion when we say all work has dignity. Workers earn a share of the wealth we create. We all do better, when we all do better. My prosperity depends on a prosperous community with opportunity and fairness.

Dig there.

Neoliberalism: the idea that swallowed the world

Wednesday = Global Economics

If you are anything like me, you’re uncomfortable with the forces at work across society that are creating tension, fear and animosity everywhere you look. When you add the ever present slurs and crude expletives, the message often gets lost. My definition of civility is way out of date. Instead of trying to understand what’s being said, I get caught up in the way the message is told, and ignore the message itself. Everything becomes a pain in the ass.

Do you know what the term ‘neoliberalism’ means? Before I read these comments by Stephen Metcalf, I thought it might be a good thing. Mindful that I’m essentially a liberal, left of center person, he says the term describes a right-wing wish list.

Metcalf suggests that for neoliberals, the the only legitimate organizing principal for humanity is competition. If mom delivers triplets, one baby is going to ultimately get pushed aside. There can only be winners and losers. By extension, if you were born in poverty, or your skin was the wrong color, or your parents were assholes, that’s too bad. If you turned out to be tall and athletic, you might make it to the NBA. It’s everyman for himself and if you come out with the short stick along the way, that’s too f***ing bad. Think Haiti, as an example.

While I personally acknowledge the presence of competition in the grand scheme of things, it’s never a guiding principal behind every outcome. This is a long article, so if you want all of it, you’ll have to click on the ‘read it here’ image.

By Stephen Metcalf August 18, 2017

Last summer, researchers at the International Monetary Fund settled a long and bitter debate over “neoliberalism”: they admitted it exists. Three senior economists at the IMF, an organisation not known for its incaution, published a paper questioning the benefits of neoliberalism. In so doing, they helped put to rest the idea that the word is nothing more than a political slur, or a term without any analytic power. The paper gently called out a “neoliberal agenda” for pushing deregulation on economies around the world, for forcing open national markets to trade and capital, and for demanding that governments shrink themselves via austerity or privatisation. The authors cited statistical evidence for the spread of neoliberal policies since 1980, and their correlation with anaemic growth, boom-and-bust cycles and inequality.

Neoliberalism is an old term, dating back to the 1930s, but it has been revived as a way of describing our current politics – or more precisely, the range of thought allowed by our politics. In the aftermath of the 2008 financial crisis, it was a way of assigning responsibility for the debacle, not to a political party per se, but to an establishment that had conceded its authority to the market. For the Democrats in the US and Labour in the UK, this concession was depicted as a grotesque betrayal of principle. Bill Clinton and Tony Blair, it was said, had abandoned the left’s traditional commitments, especially to workers, in favour of a global financial elite and the self-serving policies that enriched them; and in doing so, had enabled a sickening rise in inequality.

Over the past few years, as debates have turned uglier, the word has become a rhetorical weapon, a way for anyone left of centre to incriminate those even an inch to their right. (No wonder centrists say it’s a meaningless insult: they’re the ones most meaningfully insulted by it.) But “neoliberalism” is more than a gratifyingly righteous jibe. It is also, in its way, a pair of eyeglasses.

Peer through the lens of neoliberalism and you see more clearly how the political thinkers most admired by Thatcher and Reagan helped shape the ideal of society as a kind of universal market (and not, for example, a polis, a civil sphere or a kind of family) and of human beings as profit-and-loss calculators (and not bearers of grace, or of inalienable rights and duties). Of course the goal was to weaken the welfare state and any commitment to full employment, and – always – to cut taxes and deregulate. But “neoliberalism” indicates something more than a standard rightwing wish list. It was a way of reordering social reality, and of rethinking our status as individuals.

Still peering through the lens, you see how, no less than the welfare state, the free market is a human invention. You see how pervasively we are now urged to think of ourselves as proprietors of our own talents and initiative, how glibly we are told to compete and adapt. You see the extent to which a language formerly confined to chalkboard simplifications describing commodity markets (competition, perfect information, rational behaviour) has been applied to all of society, until it has invaded the grit of our personal lives, and how the attitude of the salesman has become enmeshed in all modes of self-expression.

In short, “neoliberalism” is not simply a name for pro-market policies, or for the compromises with finance capitalism made by failing social democratic parties. It is a name for a premise that, quietly, has come to regulate all we practise and believe: that competition is the only legitimate organising principle for human activity.

No sooner had neoliberalism been certified as real, and no sooner had it made clear the universal hypocrisy of the market, than the populists and authoritarians came to power. In the US, Hillary Clinton, the neoliberal arch-villain, lost – and to a man who knew just enough to pretend he hated free trade. So are the eyeglasses now useless? Can they do anything to help us understand what is broken about British and American politics? Against the forces of global integration, national identity is being reasserted, and in the crudest possible terms. What could the militant parochialism of Brexit Britain and Trumpist America have to do with neoliberal rationality? What possible connection is there between the president – a freewheeling boob – and the bloodless paragon of efficiency known as the free market?

It isn’t only that the free market produces a tiny cadre of winners and an enormous army of losers – and the losers, looking for revenge, have turned to Brexit and Trump. There was, from the beginning, an inevitable relationship between the utopian ideal of the free market and the dystopian present in which we find ourselves; between the market as unique discloser of value and guardian of liberty, and our current descent into post-truth and illiberalism.

Moving the stale debate about neoliberalism forward begins, I think, with taking seriously the measure of its cumulative effect on all of us, regardless of affiliation. And this requires returning to its origins, which have nothing to do with Bill or Hillary Clinton. There once was a group of people who did call themselves neoliberals, and did so proudly, and their ambition was a total revolution in thought. The most prominent among them, Friedrich Hayek, did not think he was staking out a position on the political spectrum, or making excuses for the fatuous rich, or tinkering along the edges of microeconomics.

He thought he was solving the problem of modernity: the problem of objective knowledge. For Hayek, the market didn’t just facilitate trade in goods and services; it revealed truth. How did his ambition collapse into its opposite – the mind-bending possibility that, thanks to our thoughtless veneration of the free market, truth might be driven from public life altogether?