dailyloe.com – Economist Bill Phillips built a hydraulic machine to model the British economy in 1949. He demonstrated his creation at the London School of Economics. The model used flowing water to represent financial circulation.
Water flowed from a Treasury tank to chambers for health and education. This represented government spending on public services. Levers controlled factors like the taxation rate.
Phillips had a diverse background before studying economics. He was born in New Zealand and worked as a crocodile hunter. He also mined gold and was an electrical engineer.
His demonstration initially drew skepticism from academic staff. Economist Richard Lipsey said they came to humiliate him. However, Phillips quickly proved his deep understanding.
Lipsey stated the staff realized he knew more than them. They fell silent after just ten minutes. The school subsequently offered Phillips a professorial job.
The Phillips Curve remains central to economic policy discussions today. It describes the relationship between inflation and unemployment. This early hydraulic model showcased his innovative thinking.
The story is excerpted from the new book ‘Planet Money: A Guide to the Economic Forces That Shape Your Life’. Author Alex Mayyasi details this historical anecdote. The book is available in stores now.[]
Source: NPR
