Everything you need to know about the bathtub theorem – history and explanation

Not a lot of people have heard of the relatively simple, yet not so often discussed theory in
economics called “The Bathtub Theorem”.
The bathtub analogy in discussing economics was first put forth by British professor Kenneth
Boulding in his book The Economics of Peace. He explained a number of various economic
phenomena simply as the incoming flow of water into a bathtub and the outgoing flow of water via
leakage or the drain from the bathtub. The incoming and outgoing flow of water will ultimately
determine the water level and stability of it in the bathtub.
The current tub analogy ingeniously helps put so many problematic economic concepts to easy use.
It has been used not only to explain different economic concepts, but social and life phenomena as
well.
Professor Boulding, who we previously credited as the creator of the theorem, discussed the
national income of any given country or economy in line with the water level in a bathtub. The water
level rises with an inflow of production and creativity and the water leaks with consumption.
Changes in national income can also be explained by growth of exports which leads to an inflow of
money and growth in imports which leads to an outflow of money. The national income then is a
function of the flow of imports, exports, production, and consumption with each contributing to the
rise, fall, and balance of the bathtub, and ultimately, the economy.
So, the question persists; is our economic bathtub level rising or falling? Is it stable or shaky? We are
not going to answer this question because, frankly speaking, it runs way over our heads. Considering
all the different factors that contribute to the overall growth of the economy and globalized
interaction between international finance, trade, and debt we will leave in the hands of the
economists and policy makers and in the imagination of every single one of you.
However, there is one aspect of the bathtub theorem that resonates with us as individuals. Are our
personal bathtub levels rising or falling and are our bathtub levels at the proper warm and
comfortable temperature we need them to be?
The influx of learning, knowledge, and self-development is the warm water pouring into our
individual bathtubs. If we are gaining additional knowledge and skills and are growing and improving
our character traits, then the warm waters are pouring into our bathtubs, keeping them fresh and
alive.
We should be purposely leaking and letting go of the bad habits and the bad character traits that are
holding us down and keeping our waters old and dirty. It is only via the solicitation of additional
ideas and growth and shedding old habits and mistakes that the bathtubs of our lives are kept fresh,
warm, and great.
Truly keeping our bathtubs in that harmonious balance is a lifetime task; yet the comfortable, happy
feeling it brings to our lives and the lives of those around us is most definitely worth the work.
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