Government Mandated Building Codes

As an architect who is also an anarcho-capitalist libertarian, I take every opportunity I get to share how libertarianism would have a positive impact on my industry.  The other day I was having a conversation with one of my engineer colleagues who asked me point blank, “How would we have safe buildings without building codes?”  It’s a question that I expect would be asked by many reasonable people when considering the prospect of building construction in a libertarian society, so I am happy to address it.

Of course, his question really was (maybe without him knowing it), “how could we have safe buildings without government mandated building codes?”  This distinction matters, because the fact is that building codes existed prior to the modern government takeover of regulating the building and construction industry.  And without the compulsion of the state behind them, these codes were in fact voluntary.  Which begs the next question, “Why Against the State: An ... Llewellyn H. Rockwell Jr. Best Price: $5.95 Buy New $9.95 (as of 03:05 EDT - Details) would anyone burden themselves by conforming to a voluntary building code?”  Surely without minimum standards enforced by the government, the thinking goes, the result would be shoddy and low quality buildings that sway in the wind and collapse haphazardly all over the place.  The modern consensus is that we need the government to enforce safe buildings, because without it, greedy capitalists who only care about profit would build as cheaply as they could; life, safety, and health of the public be damned.  Alas, there was a time when building codes were voluntary, yet many of these grand old structures still serve the public as well today as they did the day they were built.  To see how this was the case, a history lesson is in order.

In the late 19th and early 20th century, the two primary causes of building failure were structural inadequacy and fire.  Most building manuals and guides back then were concerned primarily with producing solid structures that would withstand fire long enough to allow people to escape before the building would collapse.  In order to provide these safeguards, many private organizations published various guides and manuals and offered them to the construction industry.  One guide that found success in the early 20th century was the aptly titled “Building Code“, recommended by the National Board of Fire Underwriters.

Did you catch that?  This code was written by insurance companies.  Why would an insurance company write a building code?  Upon first glance it seems rather strange that a code to regulate building construction would be written by a board of insurance underwriters, but when you think it through, it makes perfect sense.  Insuring buildings against damage is common business today, just as it was 100 years ago.  If a property owner wanted to take out an insurance policy to cover the risks of structural inadequacy or fire damage to his building, the insurance company has a clear interest in making sure the building they are to insure has been constructed properly.  Insurance companies would quickly find themselves out of business if they regularly insured dangerous buildings.

I imagine the arrangement was no more complex than this.  Say it’s the year 1925.  A developer in a growing city wants a new high rise for commercial or residential use.  In planning his project, he wants to know how much it will cost to insure such a building, so he asks for a quote.  The insurance company offers a policy if the developer agrees to have the building constructed according to their standards for safety.  At this point the developer has The Economics and Ethi... Hans-Hermann Hoppe Best Price: $36.00 Buy New $84.29 (as of 02:40 EDT - Details) two options: one, to pass on the offer, construct the building to low and cheap standards, and then try to rent the commercial space or sell the residential space on a building that cannot be insured.  Or two, voluntarily agree to have his building constructed to meet the safe standards as required by the insurance company.  Which would be better for business?  Would commercial or residential tenants pay for space in a building that is un-insurable?  Would you, dear reader, rent an office space in a building condemned by insurance companies as unsafe and un-insurable?  Would you, dear reader, rent an apartment in a similar building?  Would you, dear reader, as an investor, invest money into un-insurable construction projects?  Most likely not, and therefore it is most likely not that the developer would undertake such a project in the first place.  Good business practice mandates that the developer provide a strong, stable building with adequate fire exits and safety equipment.  Developers not adhering to these standards would soon enough find themselves bankrupt and out-competed by developers providing safe and insured buildings.

This is how the building and construction industry self-regulated during the early 20th century, until roughly the mid-century when states and local governments began using their monopoly powers to impose codes on the Anatomy of the State Murray Rothbard Best Price: $5.70 Buy New $17.08 (as of 03:25 EDT - Details) industry.  At this point, my engineer friend might ask what’s the difference, whether or not the codes are voluntary or mandatory if the requirements are the same?  But there is a difference, and it’s a difference that few of us today get to enjoy because that option is now denied to us.  If you, as a businessman or developer, choose to adhere to a voluntary code, you are responsible to understand and know how that code will affect the building, and your business.  Now, with government mandated codes, there is no choice and many folks involved in development and construction don’t care as much to understand the code, because, as there is no alternative, there is less reason to invest time and resources into understanding it.  I’ve often met developers and contractors who are ignorant of the primary concepts in the building codes, and one reason I think this is the case is because under government mandated codes there is less incentive for them to understand it.  On the other hand, once I had the great fortune to design a structure in a very small American town where their county did not have a building department, or building code.  After I informed the developer that he would be better off designing and constructing according to one of the reasonable codes existent at that time, for insurance and other reasons, he agreed and we chose the most appropriate code for this project.  Because of this choice, the developer asked to borrow my personal copy of this code so as to Amazon.com $50 Gift Ca... Check Amazon for Pricing. familiarize himself to it, since he was now agreeing to bind his project to its rules.

To expand further on this concept, voluntary cooperation and agreement requires active participation by all parties, as they have vested interest in understanding the terms they are agreeing to.  Regarding design and construction, the voluntary participants have a greater incentive to understand and abide by the codes, as they are voluntarily agreeing to their terms.  Conversely, compulsory codes do not require acknowledgement from all parties, and the developers, designers, and builders simply agree to the codes without having to understand them, because they have no choice.  I suspect this results in the quality of construction being less than what it would otherwise be, if we were allowed to compare the two side by side.

Additionally, forced standards stagnate the industry, as visionaries no longer have a choice in how they would like to build, even if their design is demonstrably as safe or safer than contemporary standards.  Innovation and progress in the free market of ideas is suffocated under state enforced regulations that are based in the realities of decades past.

The challenge today echoes Bastiat’s “what is seen versus what is unseen.”  The quality of construction and building technology we would have today if not stifled by decades of state enforced codes is unseen, whereas the reality of decades of state approved and mandated codes is seen by all, so that’s where the comfort level and expectations are.  The shame is that we can’t see how good it could be, if we were once again allowed to design, construct, and progress voluntarily.