How Historic Preservation Can Be Oppressive and Self-Defeating

The Strand is a mecca for all book lovers in New York City and many others around the world. It contains 18 miles of shelves loaded with books—new books, used books, pristine coffee table books, tattered paperbacks, and most importantly of all, books that just can’t be found anywhere else. The space inside is irregularly shaped and built on many levels, creating many nooks that invite quiet browsing.

But, as the New York Times reports, this storied emporium is threatened by New York City regulation. It’s not that the government needs to step in to prevent the store from harming its neighbors or the general public. Far from it, as it provides an amenity, not only to the neighborhood but to the nation. But New York City wants to designate it as an historic landmark. The difficulty is that this designation will make it harder and more expensive for the store to make repairs and adapt itself to changing market demands—change that today is intensified by online competition.

Historic preservation regulation thus raises profound questions of justice and liberty. To be sure, the Strand is a beautiful place that provides aesthetic pleasure even to those who do not buy its books. But why should the Strand have to pay for their pleasure by shouldering higher costs? It is just to require businesses to internalize the costs they would impose on strangers, but it seems unjust to require them to provide benefits to passersby. Economists may see no difference between eliminating negative externalities and maintaining positive ones, but the neglect of that distinction does not comport with a common sense of justice.

And we could make a more utilitarian argument for the distinction between positive and negative externalities that might appeal to economists. If the government imposes additional costs on the owners of beautiful exteriors and interiors, at the margin people will make exteriors and interiors less beautiful to avoid those costs. Even if a building has already been built, a new prospective buyer who would put it to its highest and best use may be deterred because of the fear that down the line he will be saddled with more maintenance.

There’s at least a partial solution to this problem. If the government wants to designate a building as an historic landmark, it should have to pay for the additional costs of maintenance from public funds as well as the diminution in its use value from the regulation.

This requirement would would have an additional benefit. In a crowded city like New York, various groups sometimes use historic preservation to prevent changes that will harm them in particular. For instance, apartments owners may fear that a new building  might block their views. Designating an old one as an historic landmark preserves their vistas. Forcing the city to pay for the additional costs would create some pressure to resist such unjustified designations. A place that is too much attached to the past because of private rent seeking will miss out on some architectural wonders of the future.