The Bathtub Theory of Economics and Life

 In economy, exports, Global Business

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
Billy O'Lading's Leaking Bathtuba number of different 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 ultimately determines the water level and stability of the bathtub.

The analogy cleverly helps put so many difficult 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 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 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 to this bathtub theory 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 ingathering of additional ideas and growth and shedding old habits and mistakes that the bathtubs of our lives are kept fresh, warm, and dandy.

Truly keeping our bathtubs in that harmonious balance is a lifetime task; however, the comfortable, happy feeling it brings to our lives and the lives of those around us is worth the work.

Kamy EliassiThis article was written by Kamy Eliassi.  Kamy is the managing director of Universal Cargo Management, Inc. and spends his time trying to keep the warm waters pouring into the company!!

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