What a difference a decade makes.
The economists who gathered here last week for their annual convention were a much different lot than the group that met 10 years ago for the yearly conclave of the American Economic Association.
By and large economists are chastened, more aware of their inability to direct the economy toward the commonly accepted nirvana of full employment without inflation.
At the same time their concerns have shifted. Inflation has replaced unemployment as the biggest worry, a concern that pollsters say economists share with the public at large.
As federal Reserve Board governor Henry Wallich noted, "unemployment, in liberal discourse, is losing its role as a successor to sex among the Victorians - as an utterly obscene and unacceptable part of the human condition."
That is not to say economists aren't concerned about joblessness. It is just that many now think they exaggerated the costs of unemployment while underestimating the costs of inflation.
Ten years ago economists were concerned with making sure the economy grew fast enough to provide enough jobs for everyone who wanted to work. Their main task - to which they felt equal - was to direct government spending and taxing actions in a manner that created enough demand for goods and services to bridge the gap between what the economy would do unattended and what was needed to get to full employment.
They did not dismiss inflation.They just felt they could control it with judicous use of the same tools they used to attack unemployment. And besides, noted Northwestern University professor Robert J. Gordon, "acceptance of a modest inflation rate was thought to buy a permanent reduction in the unemployment rate."
Ten years ago it would have been hard to argue with the "new," interventionist economists who had managed policy in the seven years of the Kennedy-Johnson administration and delivered steady growth, low unemployment and barely perceptible inflation.
When the Vietnam War threatened to upset things, President Johnson's advisers finally convinced him to intervene with a temporary income tax surcharge in 1968 to sop up excess consumer purchasing power.
But it didn't work. And it was only the first of many subsequent failures of economic policies.
Over the last 10 years the dwindling ranks of the "new" economists have longed for the 1960s when economic intervention seemed to work.
Over that decade, Gordon noted, economists have shifted from a belief in the "stabilizing" potential" of government, to a "pandemic suspicion that such policy intervention may be incapable of yielding any benefit."
And although a sizeable minority of economists, including Gordon, remain convinced that the government must continue to try to work its will on the economy, Washington economist Robert R. Nathan lamented that the profession has been devoid of any new ideas in recent years.
At the same time, the profession's fixation with unemployment has shifted to an over-powering concern with inflation.
Inflation doesn't buy a reduction in unemployment any amore but it does create uncertainty.Gardner Ackley, a University of Michigan professor who headed Johnson's Council of Economic Advisers, said that economists have underestimated the evils of inflation because in their theorizing they have usually assumed that the inflation was "perfectly anticipated" by consumers and business.
But, Ackley said, inflation is usually not well anticipated, which makes it hard for people to adjust to circumstances and unwilling to enter into long-term contracts.
The uncertainty that inflation breeds cripples the economy much more than "we previously have been led to believe," agreed George Leland Back of Stanford University. That uncertainty makes it "difficult for people to plan and to accumulate assets."
At the same time more and more economists are starting to agree with Harvard professor Martin Feldstein, who contended that unemployment insurance has not only seriously reduced the individual costs of being unemployed but may contribute to increased umemployment as persons find no great reason to go back to work immediately.
Feldstein argued that the social costs of unemployment have been exaggerated too.
But the shifting of concern from unemployment to inflation as the major evil is far from complete and warnings against ignoring unemployment are coming from unexpected sources: Federal Reserve Board and the administration's chief inflation watch-dog.
Barry Bosworth, director of the Council on Wage and Price Stability, urged economists not to conclude that inflation is a greater evil than unemployment, "Policy is failing on both counts," he complained.
Henry Wallich cautioned economists against measuring the costs of unemployment and inflation in terms that are too narrowly economic and forgetting that they are ultimately talking about people.
"There is more to the economic system than production of GNP (total economic out put)," Wallich said. "Indeed, it can be argued that the most significant impacts of unemployment and inflation fall outside the area of determination of income and wealth."