The Jobs Fallacy

Politicians fight for jobs and their constituents love it. Governments write reports that laud politicians on their success at achieving jobs often double counting. Who gets the thousands of jobs that are created when a factory or government building opens? The same people on average who lose a job when a factory closes. Who gets the jobs that are created when those primary jobs created demand for additional services? The same people who lose the jobs in other parts of the country where people are leaving. The number of jobs gained nationwide is not positive sum unless people there is immigration or a fall in unemployment. Once you set monetary policy and tax policy and immigration policy, government subsidy for jobs is a zero sum game or a negative sum game.


A typical report on the economic impact of government activity is the Federal Aviation Administration’s Office of Commercial Space Transportation report, “The Economic Impact of Commercial Space Transportation on the U.S. Economy: 2004”. The report measures three types of impacts on the US economy:

  • Direct impacts are the expenditures on inputs and labor involved in the provision of any final good or service relating to the industries analyzed herein.
  • Indirect impacts involve the purchases (e.g., silicon, copper wire) made by and labor supplied by the industries that provide inputs to the launch and enabled industries. This impact quantifies the inter-industry trading and production necessary to provide the final goods and services.
  • Induced impacts are the successive rounds of increased household spending that result from the direct and indirect impacts (e.g., a launch vehicle engineer