How Neoliberalism Gave Us Brexit and Trump

Revenge of the Rich: The Neoliberal Revolution in Britain and New Zealand

by Austin Mitchell

Canterbury University Press (2017)

Book Review

Revenge of the Rich, by British economist Austin Mitchell, describes how the neoliberal revolutions of Margaret Thatcher and New Zealand finance minister Roger Douglas virtually gutted the economies of the UK and New Zealand. The result has been years of declining or negative growth rates, virtual destruction of manufacturing, massive job loss, wage stagnation and higher deficits and overseas borrowing.*

As an article of faith, neoliberals maintain that mass layoffs of public service workers will reduce government deficits. The reality, as Mitchell ably demonstrates, is the exact opposite. When you lay off 400,000 public servants (as David Cameron did between 2010 and 2016), they quit paying taxes and increase government costs by claiming unemployment and other benefits.

Britain’s EU Membership: Setting the Stage

According to Mitchell, Britain’s decision to join the EU in 1973 set the stage for the neoliberal revolution that subsequently occurred in both countries. EU membership forced Britain to end their special trading relationship with New Zealand (an other Commonwealth countries), resulting in significant economic decline in both countries. Neoliberal trade liberalization was meant to stem these losses. Instead the loss of tariff and other import protections quickly destroyed manufacturing in both countries.

New Zealand, which was fortunate in having agricultural exports to fall back on, succeeded in developing alternative trade relationships with Australia, China and other Asian countries. Nonetheless, thanks to their 1980s neoliberal experiment, New Zealand has one of the highest levels of foreign ownership (of land, homes and companies) in the developed world. It also has the highest house prices, the second highest prison population and extremely high child poverty levels (1/3 of Kiwi children grow up in poverty). Meanwhile it’s failure to provide jobs for young adults means a sizeable proportion leave New Zealand permanently for other developed countries.

Brexit and Trump: The People Rebel

Mitchell describes the rise of left and right wing extremist groups in Europe, the Brexit vote and the election of Donald Trump as a direct popular reaction to the immense human misery caused by neoliberal policies. In New Zealand the 1996 citizens referendum adopting proportional representation was a direct reaction against both major parties (Labour and National) advancing neoliberal policies.

At this point, the traditionally pro-corporate International Monetary Fund (IMF) and Organization for Economic Cooperation and Development (OECD) have both come out against austerity and similar “deflationary” neoliberal policies. Instead they argue strongly for increased stimulus (public) spending to stabilize the world’s developed economies.


*Similar effects under American neoliberals Reagan, Bush Sr and Jr, Clinton and Obama inflicted similar damage on the US.

The Mommy Tax

the price of motherhood

The Price of Motherhood: Why the Most Important Job in the World is still the Least Valued

By Ann Crittenden

Henry Holt and Company (2001)

Book Review

The Price of Motherhood is about the refusal of English-speaking countries to acknowledge the vast amount of unpaid labor women invest in their children. Economists agree that two-thirds of society’s wealth is created by human skills, aka human capital. Yet they also refuse to acknowledge thirty years of psychology research demonstrating that the most critical education producing this “human capital” occurs in the first five years of life.

Not only is most of this work unpaid, but mothers who require part time or flexible work arrangements to address their children’s needs pay an enormous penalty in terms of lifelong earning potential. Crittenden refers to this penalty as the “mommy tax.”

According to Crittendon, while the pay differential between men and women continues to narrow, there has been virtually no change in the pay gap between mothers and unencumbered men and women. Numerous studies identify this “mommy tax,” consistently highest in English-speaking countries, as the primary cause of child poverty in the US, the UK, Canada, Australia and New Zealand. Likewise a woman’s “choice” to become a parent is the number one cause of poverty in old age.

Crittenden contrasts the US with France and various Scandinavian countries that support working mothers through policies such as free health care, one year paid maternity leave*, and free childcare. Child poverty virtually unknown in France and Scandinavia. In contrast 22% of American and 25% of New Zealand kids grow up in poverty.

The book is also highly critical of economists’ failure to count women’s unpaid labor in the GDP, given its high importance in creating a skilled workforce.** Despite the US refusal to keep data on “non-market” labor (where no money changes hands), more civilized countries do. Crittenden cites figures from Australia (where it comprises 48-64% of GDP), Germany (where it comprises 55% of GDP, Canada (where it comprises 40% of GDP), and Finland (where it comprises 46% of GDP).

Besides including “non-market” labor in the GDP calculations, the book proposes a number of other policy changes to reduce or eliminate the mommy tax. They include federal laws mandating one year paid parental leave, free health care for all children and primary caregivers, and free preschool for three and four year olds; a shorter work week; and equal pay and benefits for part time work. They also include a federal ban on discrimination against parents in the workplace, a universal child benefit, the creation of a single federal agency to collect child support obligations, and a federal mandate requiring divorce courts to award both parents an equal standard of living where there are dependent children.


*The only six countries that fail to mandate paid maternity leave are the US, Australia, New Zealand, Lesotho, Swaziland and Papua New Guinea.

**See review of Marilyn Waring film Whose Counting