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William Phillips (economist)

William Phillips (economist)

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Alban William Housego "A. W." "Bill" Phillips, MBE
MBE
MBE can stand for:* Mail Boxes Etc.* Management by exception* Master of Bioethics* Master of Bioscience Enterprise* Master of Business Engineering* Master of Business Economics* Mean Biased Error...

 (18 November 1914 – 4 March 1975) was an influential New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

 economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

 who spent most of his academic career at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...

 (LSE). His best-known contribution to economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 is the Phillips curve
Phillips curve
In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of inflation...

, which he first described in 1958. He also designed and built the MONIAC hydraulic economics computer in 1949.

Early life


Phillips was born at Te Rehunga, near Dannevirke
Dannevirke
Dannevirke , is a rural service town in the Manawatu-Wanganui Region of the North Island, New Zealand. It is the major town of the administrative Tararua District, the easternmost of the districts in which the Regional Council has responsibilities...

, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

, to Harold Housego Phillips, a dairy farmer, and his wife, Edith Webber, a schoolteacher and postmistress. He left New Zealand before finishing school to work in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

 at a variety of jobs, including crocodile
Crocodile
A crocodile is any species belonging to the family Crocodylidae . The term can also be used more loosely to include all extant members of the order Crocodilia: i.e...

 hunter and cinema manager. In 1937 Phillips headed to China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

, but had to escape to Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...

 when Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

 invaded China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

. He traveled across Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...

 on the Trans-Siberian Railway
Trans-Siberian Railway
The Trans-Siberian Railway is a network of railways connecting Moscow with the Russian Far East and the Sea of Japan. It is the longest railway in the world...

 and made his way to Britain in 1938, where he studied electrical engineering
Electrical engineering
Electrical engineering is a field of engineering that generally deals with the study and application of electricity, electronics and electromagnetism. The field first became an identifiable occupation in the late nineteenth century after commercialization of the electric telegraph and electrical...

. At the outbreak of World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

, Phillips joined the Royal Air Force
Royal Air Force
The Royal Air Force is the aerial warfare service branch of the British Armed Forces. Formed on 1 April 1918, it is the oldest independent air force in the world...

 and was sent to Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

. When Singapore fell, he escaped on the troopship Empire State, which came under attack before safely arriving in Java. When Java, too, was overrun Phillips was captured by the Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

ese, and spent three and a half years interned in a prisoner of war
Prisoner of war
A prisoner of war or enemy prisoner of war is a person, whether civilian or combatant, who is held in custody by an enemy power during or immediately after an armed conflict...

 camp in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...

. During this period he learned Chinese from other prisoners, repaired and miniaturised a secret radio, and fashioned a secret water boiler for tea which he hooked into the camp lighting system. In 1946, he was made a Member of the Order of the British Empire
Order of the British Empire
The Most Excellent Order of the British Empire is an order of chivalry established on 4 June 1917 by George V of the United Kingdom. The Order comprises five classes in civil and military divisions...

 (MBE) for his war service. After the war he moved to London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...

 and began studying sociology
Sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...

 at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...

, because of his fascination with prisoners of war's ability to organize themselves. But he became bored with sociology and interested in Keynesian theory
Keynesian economics
Keynesian economics is a school of macroeconomic thought based on the ideas of 20th-century English economist John Maynard Keynes.Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the...

, so he switched his course to economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 and within eleven years was a professor of economics.

Economics career



While a student at the LSE Phillips used his training as an engineer to develop MONIAC
MONIAC Computer
The MONIAC also known as the Phillips Hydraulic Computer and the Financephalograph, was created in 1949 by the New Zealand economist Bill Phillips to model the national economic processes of the United Kingdom, while Phillips was a student at the London School of Economics , The MONIAC was an...

, an analogue computer which used hydraulics
Hydraulics
Hydraulics is a topic in applied science and engineering dealing with the mechanical properties of liquids. Fluid mechanics provides the theoretical foundation for hydraulics, which focuses on the engineering uses of fluid properties. In fluid power, hydraulics is used for the generation, control,...

 to model the workings of the British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 economy, inspiring the term Hydraulic Macroeconomics
Hydraulic macroeconomics
Hydraulics is the science and engineering of the mechanical properties of liquids. Macroeconomics is the study of the performance and structure of an entire economy....

. It was very well received and Phillips was soon offered a teaching position at the LSE. He advanced from assistant lecturer in 1951 to professor in 1958.

His work focused on British data and observed that in years when the unemployment rate was high, wage
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...

s tended to be stable, or possibly fall. Conversely, when unemployment was low, wages rose rapidly. This sort of pattern had been noticed earlier by Irving Fisher
Irving Fisher
Irving Fisher was an American economist, inventor, and health campaigner, and one of the earliest American neoclassical economists, though his later work on debt deflation often regarded as belonging instead to the Post-Keynesian school.Fisher made important contributions to utility theory and...

, but in 1958 Phillips published his own work on the relationship between inflation and unemployment, illustrated by the Phillips curve
Phillips curve
In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of inflation...

. Soon after the publication of Phillips' paper, the idea that there was a trade-off between a strong economy and low inflation caught the imagination of academic economists and policy-makers alike. Paul Samuelson
Paul Samuelson
Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...

 and Robert Solow
Robert Solow
Robert Merton Solow is an American economist particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him...

 wrote an influential article describing the possibilities suggested by the Phillips curve in the context of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. What people think of as the Phillips curve has changed substantially over time, but remains an important feature of macroeconomic
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...

 analysis of economic fluctuations. Had he lived longer, Phillips' contributions may have been worthy of a Nobel Prize in economics. He made several other notable contributions to economics, particularly relating to stabilization policy.

He returned to Australia in 1967 for a position at Australian National University
Australian National University
The Australian National University is a teaching and research university located in the Australian capital, Canberra.As of 2009, the ANU employs 3,945 administrative staff who teach approximately 10,000 undergraduates, and 7,500 postgraduate students...

 which allowed him to devote half his time to Chinese studies. In 1969 the effects of his war deprivations and smoking caught up with him. He had a stroke
Stroke
A stroke, previously known medically as a cerebrovascular accident , is the rapidly developing loss of brain function due to disturbance in the blood supply to the brain. This can be due to ischemia caused by blockage , or a hemorrhage...

, prompting an early retirement and return to Auckland
Auckland
The Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with residents, percent of the country's population. Auckland also has the largest Polynesian population of any city in the world...

, New Zealand, where he taught at the University of Auckland
University of Auckland
The University of Auckland is a university located in Auckland, New Zealand. It is the largest university in the country and the highest ranked in the 2011 QS World University Rankings, having been ranked worldwide...

. He died in Auckland on 4 March 1975.

External links