It today’s Wall Street Journal an interesting there’s an interesting article (The Stealth Pension Mortgage on Your House) on how sometimes even when well-intended policies can have unintended, unjust consequences. The specific issue is how government pensions hurt homeowners:
On average nationwide, unfunded state and local pension burdens represent 20% of real-estate values. This ratio can rival or exceed an owner’s home equity, depending on the size of his mortgage. If real-estate prices adjust to reflect unfunded pension obligations, many homeowners’ equity could be at risk. As we’ve seen in Detroit, the public pension stealth mortgage can ultimately devastate the housing market.
The essayists, Rob Arnott and Lisa Meulbroek, don’t argue that local and state pensions are in and of themselves unjust. Rather they highlight the hidden real estate costs to homeowners and renters:
It doesn’t matter if we own or rent; landlords pass higher taxes on to tenants. Nor does it matter if properties are mortgaged to the hilt or owned outright. In time, unfunded pension obligations will be reflected in real-estate prices, if they aren’t already. A state’s unfunded liabilities are effectively a stealth mortgage on private property. Think you can pass your property on to your heirs? Only net of the unfunded pension obligations.
For most Christians, one of the hardest concepts to grasp in the ethical analysis of economic issues is the unintended negative consequences of otherwise just policies. Sometimes along with the good we intend, we end up doing harm we don’t intend but nevertheless do.