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“Heritage” Designation of Old Buildings Is Both Wasteful and Arbitrary

An old red barn in London, Ontario was recently given heritage protection by City Council. Two days later, after dark, the barn was demolished.

Owner John McLeod, citing legal advice, wouldn’t comment when asked if he’d demolished the barn but said, “I’m delighted that it’s down.”

McLeod had fought the heritage designation for the Byron barn, calling the push for it at city hall “complete stupidity.”

City Hall responded to the demolition by issuing a stop work order requiring the owner to “immediately cease the removal” of the barn “or any material part thereof.”

Councillor Anna Hopkins said she was in total shock, while Councillor Stephen Turner said, “I’m appalled that the barn was so brazenly demolished a mere 48 hours after the property was heritage-designated by council.”

Politicians’ views were not shared by the overwhelming majority of readers who posted comments to the news article. Some readers expressed disappointment, but not surprise, that council was wasting time and money on this issue. Others said heritage advocates should use their own money to purchase properties which they claim have heritage value. Many commented that the owner should be free to do whatever he wants with his own property. In short, these comments—with upvotes swamping downvotes—were highly supportive of the owner and his presumed act of demolition.

This story raises the question—once again—of whether private property should be subject to government heritage protection.

Protection of Property Rights or Protection From the Wrecking Ball?

Gene Callahan and Julius Blumfeld wrote:

The urge to protect cherished monuments from the past … is not without merit. However, the flaw in attempts to do so through legislation is that the political process cannot properly balance the value of such preservation with the cost of foregoing other possible uses for the land in question.

Only market prices can reveal the current valuations that interested parties assign to the various uses conceived for any resource. [emphasis added]

Callahan and Blumfeld are correct, but politicians and bureaucrats claim they have the expertise to effectively execute this balancing act. However, rather than protecting and upholding the rights of all people, this magical balancing act consists of nothing more than issuing arbitrary edicts which serve the interests of one group by trampling the rights of another group.

For all their grandstanding about promoting equality within society, politicians habitually enact laws which make citizens unequal under the law. In our case, political heritage protection, or lack thereof, gives some people the right to do what they want with their own property while others are denied the same right. Councillor Turner says he was appalled at what he calls the “brazen” demolition of the barn. But if anyone is guilty of brazen conduct, it is Turner and his cohorts, who shamelessly insist on unequal protection of the property rights of citizens.

According to politicians, unequal property right protection is necessary to preserve heritage value. Ethically speaking, this is a highly questionable viewpoint. Moreover, political edicts are arbitrary edicts, which have no basis in any sensible conception of value.

Heritage Value and Conflicting Political Priorities

Fact 1: London’s politicians grant heritage protection based on a subjective assessment of the historical value of a given property.

Fact 2: London’s politicians claim to support economic progress and growth.

Fact 3: Facts 1 and 2 are in contradiction.

The barn owner wants to build residential housing on the site of the barn. But how do we know whether this property has greater value (a) as a so-called heritage property, (b) by destroying the barn and building new housing, or (c) by allocating the property to any number of other uses? The future is uncertain, which means that no one can possibly know the answer to this question, least of all politicians and bureaucrats.

However, we can be certain that no one has a higher incentive than the property owner—who directly absorbs the cost of acquisition, maintenance, and development—to allocate the property to its most highly valued use. In our case, the barn owner’s assessment of value is likely based on what he believes the housing market will bear, as expressed in Canadian dollars.

Let’s assume that through the process of demolition, new construction, and the acquisition of tenants (or home buyers) the owner earns a profit—i.e., his revenue exceeds his costs. This is the key point. Profits indicate that he has created value. He has taken various resources (land, labour, materials) and combined them in such a fashion that they are worth more than the sum of their parts. Thus, benefits accrue to the owner as well as to the tenants (or home buyers) who now enjoy this new supply of housing.

(In contrast, if the owner’s venture produces losses, this equates to a destruction of value through a misallocation of resources. Therefore, owners who sustain losses are highly incentivized to improve their operations or discontinue business, thus conserving the resources for others who are better at creating value, i.e., creating wealth.)

It is arbitrary and nebulous for the government to claim that the barn has heritage value. Values are always subjective—not objective—and ever changing. Therefore, we must have a way of expressing values, and as Callahan and Blumfeld noted, “Only market prices can reveal the current valuations that interested parties assign to the various uses conceived for any resource.”

But politicians routinely ignore this basic economic principle. They ignore market prices as they formulate policy designed to satisfy special interest groups, such as heritage advocates. This invariably results in a misallocation of resources, and prevents market participants from creating jobs and wealth that otherwise would have been created—which is the opposite of the economic progress and growth that city council claims to support.

Politicians congratulate themselves for preserving so-called heritage properties while ignoring, as Callahan and Blumfeld wrote, “the cost of foregoing other possible uses for the land.” The best way to determine how property should be used is to leave the decision in the hands of the owners and to allow anyone, including heritage activists, who wishes to bid on a property to make an offer, thereby expressing their own subjective valuation of the property.

Full story here
Lee Friday
Following a 23-year career in the Canadian financial industry, Lee Friday has spent many years studying economics, politics, and social issues. He operates a news site at www.LondonNews1.com
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