The Broken Window Fallacy Of The EPA

In response to Republicans who points out that its new rules limiting carbon dioxide emissions, the Environmental Protection Agency (EPA) claims that it will create new jobs by compelling companies to invest in reducing emissions.

This is essentially the same logic as those that claims that if a boy throws a stone into a window breaking it this will create new jobs when the window needs to be replaced. And the fallacy is the same as in the classic tale: just as the expense for the window means that the business owned can't afford to buy other things, so will the cost of complying with the new regulation mean that businesses can't afford to invest in other things.

Meanwhile, the extra cost of doing business will reduce the incentive for taking the risks associated with business activity, causing a reduction in the total number of jobs.