Alan Blinder bombed in Jackson Hole. Normally, this wouldn't be news. Blinder is an economist who taught at Princeton and, until recently, served on President Clinton's Council of Economic Advisers. If this were all, his talk at a conference in Jackson Hole, Wyo., wouldn't matter. But Blinder has been named vice chairman of the Federal Reserve Board, and there is speculation that he could succeed Alan Greenspan, whose term as chairman expires in early 1996. Based on Blinder's Jackson Hole talk, the possibility is unnerving. He simply isn't qualified.

This matters. Blinder's attitudes -- whether he is named Fed chairman or whether the same views are shared by future Fed appointees to the seven-member Fed -- represent an enormous throwback. Put simply, Blinder is "soft" on inflation. Although he denied this at his Senate confirmation hearing, the denials don't sit well with the views he delivered at Jackson Hole. These represent a refurbishing of the 1960s' idea of "fine-tuning": that the Fed should raise and lower interest rates to keep the economy at, or close to, "full employment" without worsening inflation.

Ideally, this would happen, but unfortunately, we don't live in a utopia. In practice, the Fed periodically faces the chancy gamble of trying to spur a bit faster economic growth (through looser money and credit policies) at the risk of a bit more inflation. All of Blinder's intellectual and political biases seem to be on the side of risking more inflation. It is precisely this attitude that got us into trouble in the 1960s and 1970s, because the ultimate -- and potentially inflationary -- consequences of looser money policies typically don't become apparent for a year or two.

To be fair, Blinder has apparently gone along with Greenspan's present policy of raising rates to blunt early inflationary pressures. (Since February, the Fed has raised short-term interest rates five times, from 3 to 4.75 percent. Blinder was at the Fed only for the last increase.) But it is an open question whether Blinder would have moved so aggressively himself or whether, some time in the future, he would promote excessively easy credit to avert or reverse a recession.

There is really no secret about Blinder's views. They are spelled out in great detail in his 1987 book, "Hard Heads, Soft Hearts: Tough-Minded Economics for a Just Society." In it, he argues that "the harm that inflation inflicts on the economy is often exaggerated" and that government ought to worry "less about inflation than {about} running a high-pressure economy in which jobs are plentiful." Blinder played down these views at his confirmation hearing; but the Jackson Hole talk in late August shows that his basic thinking hasn't changed.

Fighting inflation, Blinder said in his book, created "excess" unemployment and lost production. He presented a table showing the extra jobs and production that would have occurred if the unemployment rate had been held at 5.8 percent (his target then for "full employment") between 1975 and 1986 rather than the actual rate of 7.6 percent. On average, the economy would have had 3.2 million more jobs a year; over the entire period, production would have been $1.5 trillion greater. Correct "policies would never permit waste of this magnitude," Blinder wrote.

This is a simple-minded and wrong argument on two counts. First, it unrealistically presumes that government could have easily kept unemployment around 5.8 or 6 percent. This is a fantasy. In the 1960s, some economists believed they knew enough to override the business cycle. Now few do, as even Blinder seems to concede at other points. The second objection is that Blinder mistakenly blames most unemployment and lost production on "fighting inflation" when he should have attributed much of it to "letting inflation get out of hand."

It is only because the Federal Reserve had allowed inflation to rise to such high levels (12.3 percent in 1974 and 13.3 percent in 1979) that the recessions -- and unemployment -- of the mid-1970s and early 1980s were so severe. The Fed could then quash spiraling wage and price increases only by raising interest rates sharply to create huge surpluses of workers and goods. Recessions are inevitable, but the harshness of these recessions was not.

Blinder also ignored other costs of inflation. The savings and loan crisis, the farm-debt crisis and the Third World debt crisis of the 1980s all ultimately stemmed from the easy (and inflationary) credit policies of the late 1970s. So did the whipsawing of exchange rates, which devastated many manufacturing firms. Finally, higher inflation has almost certainly hurt productivity and income growth by encouraging speculation and poor investments. Suppose the loss of productivity growth is only 0.1 percent annually. Over two decades, this tiny annual loss would accumulate so that our present output would now be about 2 percent less than it might have been. In a $6.7 trillion economy, that's about $130 billion of lost production annually.

Of course, Blinder doesn't like inflation. But the Fed must constantly make decisions, and mistakes are inevitable -- policies may be "too tight" or "too loose." Anyone who minimizes inflation's dangers and real costs is likely to make inflationary mistakes. This is especially true if it is sometimes necessary, as it is, to tolerate slow growth or a recession as an antidote to price pressures. The Fed cannot dare to be unpopular, by tightening credit, unless it truly believes in inflation's long-term dangers. "You have to start with the conviction that price stability is better than inflation, and that 'better' means better for economic growth and stability and in the long run better for everybody," as former Fed chairman Paul Volcker has said.

Without this conviction, Blinder lacks the moral or intellectual qualities needed to lead the Fed. He seems to have forgotten the basic lesson of the past 20 years: that economic growth and job creation spring from the private economy, and that government -- for better or worse -- mostly creates the climate for growth. Blinder and those like him see themselves as economic engineers who can manipulate the whole process. As his book's title implies, the ultimate aims are to promote social justice and help the poor. Blinder is a decent man, and these are worthy goals. But except indirectly, they are not what the Fed is about.