the long view: raise the roof (7 August 2013)

Raise the Roof
Dr. Walter Greason
Norristown Times Herald
7 August 2013

Twenty years ago, Eric B and Rakim advised their audience to “know the ledge.” It was a clever way to encourage people to be both street smart and book smart. A great story over an amazing beat, packaged in the soundtrack for a popular movie, made it a legendary piece of hip hop history.  The risk of the ledge was falling to your death.  A few years later, it became apparent that while many people knew the ledge, very few knew the roof.  The roof is the global asset ceiling – the maximum value of everything it is possible to own.  No one knows this number.  In twenty years of inquiry, the best answer has been “it’s a really big number.” Cambridge University economist Sir Partha Dasgupta laid the foundation for a current estimate – the combined value of assets held by every nation on Earth is roughly 420 trillion USD.  It isn’t the asset ceiling, though, because it does not include privately held capital.  Yet, knowing the roof is important because in a capitalist world system, if you set inappropriate goals, you have lost the competition before you have begun.

Before my students learn about the scale of global wealth, they estimate how much they expect to earn in the best three years of their working lives.  98% of them suggest total earnings in those years under 500,000 USD.  The finance students form the majority of the outliers, and they estimate approximately ten times that figure for their best years.  None of them ever guess what they will need to be truly competitive as the information world system continues to expand over the next century.  Their myopia is a direct result of their indoctrination as consumers. That training stretches back to the influence of the American Committee on Public Information during the First World War.  A century of increasingly sophisticated advertising has caused people to spend reflexively, resisting any attempt at critical thought in their choices.  Today, for a household with two workers earning less than 50,000 USD a year, consumer spending encumbers the household with almost 8,000 USD in debt on average. A household earning between 80,000 and 180,000 USD only incurs less than 4,000 USD in debt on average. Only the households earning over 220,000 USD on average begin to acquire assets to secure long-term stability.  Consumer spending built the most powerful, information economy the world has ever seen, but it has cost its consumers the autonomy and liberty American civilization promised humanity at its founding.

Reducing wasteful spending on entertainment is the key to restoring a household’s economic balance.  With less than 50,000 USD a year, a family should spend no more than $200 a month on takeout food, restaurant dinners, tv/movies/phone/gaming, and vacations. At the middle-income levels, entertainment spending should stop around $900 a month.  Even among the highest-income earning households, responsible spending should not exceed $2000 a month.  Yet, the global service economy teaches generation after generation that unlimited spending is the most fundamental entitlement of a free people. This orientation betrays the virtue of thrift that makes prosperity possible.  Moreover, without these kinds of limitations, the pursuit of happiness (the protection of property) defined in democratic constitutions worldwide becomes impossible.

Recognizing and respecting these constraints is the heart of a household budget. It requires discipline to reject the training the world system requires.  The immediate benefit is the creation of an emergency fund – a basic asset to protect any family. The emergency fund should cover at least three months (and ideally, up to 18 months) of a family’s total expenses – varying from 9,000 USD to 108,000 USD.  Once you’ve achieved this goal, you are on the path to economic autonomy.  It is the floor of the system and the foundation of your effort to truly raise the roof.


Dr. Walter Greason is the Chief Executive Officer of the International Center for Metropolitan Growth and author of Suburban Erasure: How the Suburbs Ended the Civil Rights Movement in New Jersey.  Questions and comments are welcome on Twitter, Facebook, and by email (

Author: waltergreason1

Public Figure.

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