Remembering A "Hero & Saint"

Thanks to Chandra, I was made aware of the fact that this year marks the birth centenary of Professor BR Shenoy, the only official economist to pen a "Note of Dissent" to Chacha Nehru's grandiose Second Five Year Plan that was modeled after the Soviet strategy of "heavy industrialization."

Chandra has also provided the link to a speech made on the occasion by one of our central bankers, comparing Shenoy with Hayek. Yet, Shenoy is better described in the words Peter Bauer used for him: "Hero and Saint." He was a Hero for standing up to Nehru and his economist-sycophants. And he was a Saint for taking the consequences without batting an eyelid. Shenoy was hounded out of academia. His name was not heard of when I studied Economics in Delhi University in 1974-77. He was still alive then. Hayek received a Nobel prize during those very years.

The memorial lecture I have cited above, by a central banker, quotes at length from Shenoy's "Note of Dissent." I will quote just a few words:

To force a pace of development in excess of the capacity of the available real resources must necessarily involve uncontrolled inflation. In a democratic community where the masses of the people live close to the margin of subsistence, uncontrolled inflation may prove to be explosive and might undermine the existing order of society …We should be therefore, forewarned of the dangers of an over ambitious plan.

Nehru printed money to build his steel plants. The result was "uncontrolled inflation." This method of financing The State continues till today; and even as I write, a columnist in Mint argues for more "stimulus spending." The words have changed, but the idea is still the same - that government spending gone out of control is "good for the economy."

In the memorial lecture cited, para 4 is particularly noteworthy:

Shenoy’s Note of Dissent was a sole voice in the wilderness. Yet, ignoring his views was costly and the rest is history. What followed was the foreign exchange crisis of 1957-58 and the response to this was even more physical controls. The majority view prevailed for the next 35 years and the economy was punctuated by cycles of large deficit financing, foreign exchange crisis and draconian controls till it culminated in the foreign exchange crisis of 1991.

Actually, Shenoy's was NOT a "voice in the wilderness." His was a voice that was DISPATCHED to the wilderness because he disagreed with the great socialist Nehru. That took guts - and the willingness to face all consequences.

Anyway, inflation is still with us, as are inflationists. Yet, it is heartening to hear that Shenoy is being remembered today. The battle against inflation must be waged. May a thousand Shenoys rise.

The enemy today remains the socialist State. Today, they no longer want to print money to build steel plants, for Mittal has amply proved he can do this better than The State. Rather, the effort is build a Welfare State with a bloated welfare bureaucracy - all "tax parasites." Leading this effort is prime minister Chacha Manmohan. He is no hero. He is a sycophant. He is no saint. He is pure evil. The Shenoys of today have their job cut out for them.