Fight on Prices

New wage-price chief:. "We can do a lot better"

In its efforts to hold down prices, the Carter Administration has so far talked softly and carried a small stick. Yet concern about persistently high inflation has been growing in recent months, and there are indications that the White House may now be ready to take at least a slightly more active stand against rising living costs. One sign came last week when the Senate approved the President's appointment of Barry P. Bosworth, 34, a Brookings Institution economist, to succeed Michael Moskow as chief of the Council on Wage and Price Stability. The council, a relic of the free market philosophy of the former Administration, has no power of enforcement and has been less than vigorous in exercising its authority to review wage and price increases. Bosworth, however, would like nothing better than to transform the council into a potent force in the fight against inflation. Says he: "I do think we can do a lot better than we've done in the past."

A wiry, ruddy-faced redhead, whose shock of tousled hair makes him look about ten years younger than he is, Bosworth has packed a lot of experience into his relatively short career. A protege of Charles Schultze, chairman of the Council of Economic Advisers, Bosworth got his first taste of Government work as a staff member of the CEA in 1968, while he was still working toward a doctorate in economics at the University of Michigan. He joined the faculty of Harvard University in 1969 and stayed until 1971, when he left to sign on at Brookings.

Bosworth comes to his job as the nation's top inflation fighter at a jittery time. Despite falling food prices, the Consumer Price Index has been racing upward at an annual rate of 8.1 % over the past three months, well ahead of the Administration target of 6.5% for this year. The most faithful White House aides are now skeptical that the President will achieve his goal of reducing inflation to 4% by 1979. One reason: many economists fear that the combination of taxes and price boosts in Carter's energy program will only add to living costs.

Bosworth defends the Administration's cautious approach to inflation so far, but he is determined to have the council play a more aggressive role from now on. For example, to provide the White House with a sharper picture of inflation, the council will begin keeping an "early warning index" by charting day-by-day cost and price developments in a few bellwether industries such as steel, autos and construction. Says Bosworth: "In the past, the council churned out studies and recommendations that may have been good but went nowhere. My job is to see that our work gets transmitted more effectively." The President's reorganization plan should also add to the council's clout. Under the plan, which took effect last month, the council was shifted from the Treasury Department to the CEA, giving Bosworth easy access to his friend and mentor, Schultze.

Bosworth agrees that the Administration's policy toward inflation is at last beginning to stiffen. Until recently the President's top economic aides relied almost exclusively on informal talks with industry and labor leaders to keep wages and prices in check. These sessions will continue, says Bosworth, but in addition the White House is now prepared to speak out against what it considers unjustified price hikes. Indeed, last week, President Carter ordered the council to investigate pricing policies in the steel industry and told the Pentagon to be sure to buy the lowest price steel available. Last month, the Administration condemned a price hike by U.S. Steel, but to no avail; the next day Bethlehem Steel followed the U.S. Steel increase.

Most businessmen and labor leaders are opposed to jawboning, guidelines or any other form of wage-price regulation.

They contend such tactics do nothing to root out inflation's basic cause. Even so, many economists believe that to be effective, the White House will have to take a much firmer stand against Big Business and Big Labor. Says Harvard Economist Otto Eckstein, a member of TIME'S Board of Economists: "Quite honestly, at the moment I don't think the Administration's got an anti-inflation program." Unless the White House gets tougher, some economists fear, the job of restraining prices will fall to the independent Federal Reserve Board and its Chairman Arthur Burns, who has repeatedly made it clear that he will tighten up credit rather than permit runaway inflation. Whatever else it might accomplish, that strategy would almost certainly result in slower growth and even higher unemployment.

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