IN ITS DIRECT and literal effect, Judge Barrington D. Parker's decision will have only a limited impact on President Carter's wage and price guidelines. The judge said only that the administration could not withhold federal contracts from companies in order to enforce guidelines that were, after all, voluntary. The contract sanction hardly applied to the things like gasoline and interest rates that have been responsible for most of the recent increase in inflation.
But the symbolic and psychological effects of the judge's decision are going to be extremely damaging to the guidelines and any further attempt to enforce them. Voluntary rules work only as long as people think they are working. The decision draws attention to both the current acceleration in inflation rates and the paucity of weapons to combat it. If people now conclude that inflation will only get worse, that view of the future can quickly become self-fulfilling.
The guidelines were being rapidly eroded long before the judge's decision appeared. When the White House drew up the present guidelines last October, the inflation rate was running a little over 8 percent a year. The administration assumed that the main danger this year would be the catch-up game, in which people in every part of the economy try to recover the losses of past inflation and, in the process, make the inflationary process spin faster than ever. The guidelines were Mr. Carter's attempt to induce Americans to join, by common agreement rather than by legal coercion, in giving up just a little to bring the inflation rate down perhaps one percentage point during 1979. Although small, that reduction would have demonstrated that the inflation was controllable and that it was declining.
That strategy was knocked askew by the surge of price increases - particularly in food, oil and other raw materials - that began around the turn of the year. In the past several months consumer prices have been running at an annual rate of about 14 percent, twice the guideline for wages. That disparity is too much for any voluntary rule to withstand. It is also true that voluntary guidelines, like mandatory controls, are a good deal more effective in holding down wages than prices. The White House can count on most employers to help it restrain payrolls; there is no similar built-in check on prices.
One sanction now remains to Mr. carter - his ability to identify and condemn, in public, those industries, companies and unions that have grossly violated the guidelines. That won't put anyone in jail. But it cconstitutes a kind of public exposure that is greatly disliked by sensible people in business and labor, and they will go to great lengths to avoid it. Mr Carter has resisted that course. But unless he wishes to abandon his guidelines altogether, he himself now has to take up the defense of them.