Alfred E. Kahn, President Carter's "inflation czar," is leaving the administration immediately after the election whether the president wins or loses. He's not mad at anybody, but he's had one of the more thankless jobs in Washington and he wants out.
So win the president's assent -- and Kahn's Capitol Hill house now sold -- Kahn will return to his teaching post at Cornell University. There, he says, "I can be my own boss."
In his office the other day -- shoes off, and relaxed in his cane-backed rocking chair -- Kahn admitted that it's been frustrating "being an adviser without clear institutional responsibilities."
It was painfully evident from the start of Kahn's promotion to being chief inflation fighter that he had been Peter-principled out of his more comfortable role as chairman of the Civil Aeronautics Board, where he gave impetus to the deregulation of the airlines.
Although he was supposed to be in charge of Carter's anti-inflation program, Kahn's chief problem was that there was no program to be in charge of .
It was no secret that Kahn was not one of the inside group of Carter's economic policy-makers, including Economic Council Chairman Charles L. Schultze, White House aide Stuart Eizenstat and the secretary of the Treasury -- at different stages, W. Michael Blumenthal and, currently, G. William Miller.
Kanh says he "never has been much good at jostling. I'm not the kind of guy who says: 'Let me into the huddle.'"
Thus, Kahn had little real effect on crucial policy questions. When the Chrysler Corporation appealed for government help, Kahn argued that the White House should not give its blessing to an inflationary wage increase for the United Auto Workers. But he was batted down by others in the Carter entourage who did not want to risk losing UAW support during the election.
When Miller, Schultze and other topCarter aides were forswearing a tax cut last spring (until, somehow, the budget was to get balanced), Kahn was saying plainly that tax reductions would be needed. His position is now official administration policy.
Despite his defeats, Kahn is a firm supporter of President Carter and is spending as much time as he can picking holes in the Ronald Reagan economic program for any reporter who will take the time to listen.
Kahn sees a number of "surprisingly optimistic signs" of economic recovery. But he isn't ready to endorse the rather amazing declaration by Commerce Department economist Courtenay Slater that the recession is already over and the upsurge has begun.
More realistically, Kahn admits that "everybody is troubled by the [recent] rise in interest rates." His own judgment is that with wage settlements in the 9.5 to 10 percent range, "there is no reason to see a decline in the basic inflation rate from about the 10 percent level." He acknowledges that any 1981 recovery will be painfully slow.
Like many academics (and he freely admits that he thinks more like a professor than a politician or a bureaucrat), Kahn says that the government must eventually use its taxing power to encourage wage and price restraint.
He favors a "TIP" system -- TIP is an acronym for "tax-related incomes policy." There are many variants of the system, but the idea is to give a tax concession to companies and workers that hold down prices and wages. There are many practical complications to Tip, but it is short of formal wage-price controls.
Privately, the Carter team discussed the possibility of including a pro-TIP declaration in the recently announced "economic renewal" program. But they decided that there is not yet the necessary political consensus for it.
Nonetheless, in a recent interview, Eizenstat told me that "when there are income-tax cuts during 1980s, we think they should be structured in such a way as to help with inflation, rather than hurt, and that might mean, trying it to wage and price restraint." There are other possible ways, relating to offsets against local sales taxes, or food tax rebates.
It may be understandable that President Carter was gun-shy, constrained not only by election-year caution but by the absence of meaningful labor or business support for an incomes policy.
But given the continuing dangers of inflation, internal and external, no industrial policy is worthy of the name without such an approach.
As he leaves town, Kahn says that holding back increases in money wages and prices constitutes society's most important challenge. He is realistic enough to know that as "inflation czar" he didn't contribute much to the cause. But it was hardly his fault, and he leaves with his integrity intact.