"BETWEEN 1973 and 1975 we had the deepest banana that we had in 35 years, and yet inflation dipped only very briefly." The economist Alfred Kahn, who heads the administration's task force against inflation, has taken to using "banana" for the word "recession." The reason, he amiably explains, is that references to recessions seem to make people nervous and irritable. He hardly needs to add that one of the people made most irritable is his employer, President Carter.
In the peculiar atmosphere that frequently precedes a recession, the CVI -- the Candor and Veracity Index -- takes a sharp dive, and everyone in official positions is required to pretend that the probable is impossible. It is one of the conventions of American politics that no president can ever acknowledge any chance of a recession ahead. That custom is now adding another element of murkiness and uncertainty to public discussion of the coming year's prospects. High officials are permitted to speak of slow growth ahead. But all references to recessions are forbidden -- as noted by the effervescent Mr. Kahn, who likes to live dangerously.
Over the past 30 years, this country has been through six recessions. One of them was in the Truman administration, and three in the Eisenhower years. The definition of a recession is, incidentally, a contraction of the economy -- a decline in the gross national product -- in two consecutive quarters of a year. One body of opinion held that they were natural and necessary adjustments in a country that was, after wall, getting richer rapidly.
But the 1960s were different. A combination of skillful management and good luck brought a prolonged surge of growth. There was a hesitation in 1966-67 that some students of the subject think might have turned into a recession had not the government been financing an increasingly expensive Vietnam War with borrowed money. Despite the war, there was a recession in 1969-70. Several years later, aggravated by soaring inflation, another developed. As Mr. Kahn observed in his comment on bananas, it was the worst since the Depression, but, as a remedy for inflation, it proved remarkably ineffective. It is now nearly four years since the last of those contractions, and the familiar pattern seems to be asserting itself again.
That is not a prospect for anyone to regard with equanimity. A recession imposes costs that are real, serious and very unequally distributed. Two of the most prominent victims are those cherished values, opportunity and mobility. It gets harder for people to get on the ladder, step up it or try new ventures. For those people fortunate enough to have established positions and seniority with prosperous companies, a recession can pass unnoticed. For the young, the blacks, the people stuck in jobs they dislike -- for the outsiders and the newcomers -- it's another matter.
But can a recession be avoided? The answer has to be that the favorable conditions of the early 1960s no longer obtain. There are things that a government can do to postpone a recession for a time. But all of those things are inflationary. Since a high inflation rate makes recessions more destructive than ever, that would be a wantonly bad choice. Mr. Kahn is arguing that, if a government must work without public support, it has only limited weapons to combat inflation. They amount to spending cuts and high interest rates, applied in ways that incur deep social costs. The Carter administration's strategy is to enlist sufficient voluntary cooperation from wage earners and from companies to work down the inflation rate without having to hold the country in a state of prolonged economic stagnation. A recession in the coming year is likely. Whether the administration can get the public cooperation to keep it a mild and short one is very much an open question.