THE INCOMING administration has not yet appointed its Council of Economic Advisers, or even provided much interesting gossip on the subject. The omission is apparently a deliberate demotion of the organization, and of the profession as well. Economists may well have become the only large minority in the American population that a successful politician can safely ignore.
It's a remarkable contrast from the original Carter Cabinet. The secretaries of the treasury, commerce, labor and energy all had PhDs, and were supported by an impressive array of professional economists in sub-cabinet jobs. They were people of notable ability and yet, oddly, they all seemed to cancel each other out. Economic policy was never among the Carter administration's successes, and the reasons are worth keeping in mind.
When Mr. Carter came to office, the country was in the second year of a slow recovery from a very deep recession. The new administration's first thought was to speed up the process of generating jobs and getting the unemployment rate down. The prevailingview was that the shocks of the early 1970s -- above all, the first oil crisis and the leap in world grain prices -- were unique events, utterly unlikely ever to be repeated on that scale. The task at hand, it seemed obvious, was to overcome the lingering effects of those setbacks and to get growth back up to accustomed rates.
As for the inflationary pressures generated by high growth that -- according to the prevailing view in the administration four years ago -- would not be a matter of any concern until much later. With the unemployment rate well over 7 percent, it seemed impossible that high demand could create inflation. A year later, with the unemployment rate over 6 percent, it still seemed impossible. But by that time inflation was visibly accelerating again.
The administration then decided to try another experiment with incomes policy. The White House called it real wage insurance -- a promise to indemnify workers against unexpectedly high inflation if they accepted relatively low wage raises. The concept had a certain intellectual beauty. But its complexity, and the risks of enormous costs to the federal government, appalled Congress, and the idea quickly died.
The recovery of the first two Carter years had another effect as well. It sharply increased American oil consumption, tightening world oil markets and preparing the conditions that led to a doubling of the oil price in 1979. The oil crisis of the early 1970s, it turned out, was not unique at all but recurrent, likely to repeat itself whenever strained oil supplies were threatened by the political instability of the Middle East.
The next administration is already beginning to speak of the need of high economic growth, and to deliver the familiar message that inflation can't be conquered without it. But Mr. Reagan and his colleagues are going to have to tell the country how to achieve growth without driving up wages and oil consumption once again. It's not difficult for a president to shed the economists. It's harder to escape the exigencies of the subject with which they struggle.