Well, the question isn't whether it should happen at all, it's whether the government should do it. I feel pretty conflicted about the government spending money on cultural stuff. But without government money (or at least tax expenditures) historic preservation would basically only happen when some rich person liked an old building. Maybe cultural preservation is different than just generic arts spending.
Your point is kind of the argument I'm making, though. It is really tempting (and maybe politically necessary) to make an economic argument, but that argument is always going to be weak. Once you start putting a price tag on history, you're going to have to prove that not only is there an economic impact, it's also more "bang for your buck" than any other possible use of funds (there is actually evidence that investing in rehab of old buildings is more efficient than investing in new construction, though). But of course if you make a purely "public history" argument you get into all sorts of "whose history" and conflicting opinions and politics. Also, you know, things cost money.
The current state of the profession seems to be what this author I'm reading calls "essentialism," basically that the value of old buildings is intrinsic and all subjective value judgments should be avoided. The same way we do archaeology, saving the pot sherds and coprolites along with the sarcophaguses and marble statues. But if you try to erase politics you're still gonna end up making value judgments, just not acknowledging them.
At this point my big concern with this paper is that I'm relying almost entirely on two sources. One of which is a literature review. I am kind of confused about the the ground rules (he is calling it a "take-home exam" instead of a paper) so I am going to stop by his office and make sure this is OK. This is something I feel like I missed somewhere-- how legit is it to use something as a source that is just a compilation of analysis of other work. Something about citing someone quoting someone else's writing feels like cheating. The kind of cheating you do accidentally when it's midnight on a saturday and you have tons of other stuff to work on between now and when this paper is due.
This paper is also a response to the phenomenon, including my past self, of white-dude urban planning types looking at fucked up neighborhoods and thinking "wow look at these poor buildings" instead of "wow, these poor people." Trying to challenge myself to justify why we should ever care about buildings. Also the decision to mothball old buildings in St Louis and other declining cities where it's very possible we might NEVER have people to live in them.