At some point people decided that humans should be referred to as "he" and "she" and inanimate objects as "it". I don't know exactly who made that decision and when, or if there is anyone who does. Whether some committee was convened to decide on proper pronoun usage (which I doubt), or whether it shook out over a period of time, is irrelevant. The decision was made. From that point on, referring to another human as "it" implied that you do not consider them a person.
This is not really "circular logic", but rather a matter of applying definitions. Like, why is this website called "english.stackexchange"? It's because someone made up that name. You could say it's circular logic in a sense, "It's called english.stackexchange because that's what it's called". But really, someone makes up a name, then that's what the thing is called. It's not that mysterious a process.
Okay, really I'm oversimplifying when discussing English pronouns. There were plenty of languages around before English was invented that had pronouns, and many (most? all?) of them had masculine, feminine, and neuter. This is an idea that has been around since the beginning of recorded history. The biggest difference between English and other languages is that only apply "he" or "she" to inanimate objects in very rare cases, while other languages attach gender to all sorts of things.