Does Less Unemployment Actually Make the Economy Grow?

The Myth: Jobs = Growth

The talking heads love to say that if people are working, they’re spending. If they’re spending, that must mean growth. Right?

Wrong.

Just having people employed doesn’t create real wealth. If that were true, we could just hire a million people to dig holes and fill them back in. Boom—economic utopia! But that’s nonsense.

What Actually Grows the Economy?

Savings and real investment. When people save money instead of spending it all, those savings can be used to build tools, factories, and infrastructure. This makes future production more efficient, which means more real stuff gets made, and more wealth gets created.

A guy named Crusoe building a house takes 250 hours with no tools. But give him an axe (capital investment), and it only takes 200 hours. That’s the point. Tools, machinery, and long-term planning—not mindless employment—create wealth.

Why Government "Job Programs" Are a Trap

When the government creates jobs just to lower the unemployment rate, it’s not creating wealth. It’s just taking money from productive parts of the economy (through taxes, borrowing, or printing money) and spending it on unproductive stuff.

That weakens real economic growth. It’s like stealing from your best workers to pay people to walk in circles. It might lower the unemployment rate on paper, but in reality, it’s draining resources from the people actually building something.

The Free Market Fixes Itself

In a truly free labor market, anyone who wants to work can find a job at the market rate. If someone can’t find a job, it might be because they’re asking for too much, or they’re unwilling to move or learn new skills. That’s not a market failure—it’s just reality.

Over time, wages rise not because of government policies, but because productivity rises. Better tools, better training, better capital—that’s what lifts wages.

Inflation Isn't Caused by Wages

Another myth: people say rising wages cause inflation. But again, that’s backwards. Inflation comes from printing too much money, not from people earning more.

When the central bank (like the Fed) pumps money into the economy, prices go up—not because workers are greedy, but because the money is worth less. Wages go up because prices are rising, not the other way around.

The Krugman Delusion: "Free" Jobs

Economists like Paul Krugman say we should just hire people to dig ditches during recessions. They argue it's cost-free because otherwise those people would be doing nothing.

But who pays for this? The money comes from taxes, borrowing, or inflation—all of which suck the life out of the productive economy. It’s not free—it’s a slow bleed of the real wealth creators in society.

The Bottom Line

Economic growth isn’t about full employment—it’s about real production, savings, and investment. Every time the government tries to “fix” unemployment with fake jobs and printed money, they’re just weakening the foundation of the economy.

If you want real stability, start thinking long-term. Stop chasing employment numbers like they’re the Holy Grail. Build, save, and invest in real productivity.

Call to Action:

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