Actually, in 1971, IBM did have a Selectric typewriter that could do that. It was a computerized typesetting machine called the IBM MTSC (Magnetic Tape Selectric Composer).
I know because I was editor-in-chief of my college newspaper, and when this system hit the market, we acquired one and started doing our own in-house typesetting and production.
It consisted of two units actually (only one shown in the picture). The first unit was an input unit, where you would basically type and code on a modified Selectric typewriter, and the keystrokes would be captured on a magnetic tape. Then a second output unit, which actually did have kerned font balls, would read the tape and automatically type. When the coding called for italic, bold, superscript or other effect, the output unit would stop so that the operator could manually change the fonts.
As I recall, it sold for around $14,000 at the time, and required a week-long on-site training program by IBM.
After I graduated college in 1972, I supported myself for a time as a professional typesetter on this equipment because it was pretty commonly used at professional "type houses" (yes, there were such typesetting businesses).