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Libertarian women’s history month: Sudha Shenoy

10 Mar

Sudha ShenoyPhD (1943–2008) was an Austrian School economist and economic historian. From 1986 to 2004, she worked as a lecturer in economics at the University of Newcastle in Australia. She was an Honorary Associate in Economic History at the School of Policy and an adjunct scholar at the Ludwig von Mises Institute.

Shenoy’s father was Professor Bellikoth Raghunath Shenoy, an eminent Indian economist who studied under Friedrich Hayek at the London School of Economics.
Shenoy published many articles on economic history and economic development and also compiled and edited Friedrich Hayek’s book A Tiger by the Tail: The Keynesian Legacy of Inflation.

Shenoy was a strong advocate of free trade and a critic of central planning and the welfare state. She once told Lew Rockwell that Australia was “freer than the US.” When Rockwell asked why, she replied: “Because Australia never had a civil war, and so we still have states’ rights.” She added: “Jefferson was correct about competitive sovereignty helping to preserve liberty.”[1]

Shortly before her death she gave reason magazine her thoughts on the 2008 financial crisis: 

 Federal Reserve officials twisted J P Morgan’s arms — which was why the latter ‘agreed’ to buy. Officials had to provide Morgan’s with a loan & a guarantee against the weakest ‘investments’ — bad mortgages — in the Bear Stearns portfolio. These dubious liabilities amount to some $US 33,000 million — or some 138% of its total purchase price. Thus its unsound investments are one reason for the very very low price that Bear Stearns’ shareholders received — even from J P Morgan’s & even after a Federal loan + guarantee.

In the absence of Federal Reserve intervention & arm-twisting, Bear Stearns would undoubtedly have had to cease trading. And no doubt it would’ve been taken over, eventually — at an even lower price. All that govt officials could do was to shorten this time period, & possibly prevent Bear Stearns’ value from falling even further. But even the almighty Federal Reserve — the world’s largest & most powerful central bank — could not prevent the huge capital losses that Bear Stearns’ shareholders suffered. In short, even the Fed could not stop the de facto failure of one of the world’s largest investment companies. 

She was also highly critical of mainstream economics and especially the widespread adoption in mainstream economics of the methods of the natural sciences; she believed that, as a result of this methodology, mainstream economics was hopelessly removed from the real world.[2] In a 2003 interview, she commented that:
I’m prepared to say that nearly every economics department in the world could be shut down without having an ill-effect on the world of ideas.