Any job that is created by automation will later be automated anyway. That's the whole point of automation. It's a recursive function, and in the past it was so that the jobs were created faster that they were automated away. But I don't think it's reasonable to assume this will continue. There's a great qualitative difference between automating muscle power (what we did in past centuries) and brain power (what we're doing now).
Even now more and more jobs that are created are jobs that are harmful to society and shouldn't exist in the first place. Imagine a slight modification of your story - that there are two public works projects; one is digging a canal, the other is filling it up. More and more fuel, material and man hours are being used up as both sides gain access to additional workers and better technologies, and yet the canal stays half-built, as one group cancels out the work of the other.
Now replace canal building with advertising industry, and it's exactly what we have today in the real world. Hell, I'd argue that half of the web industry is also such useless waste of time and resources. This is what we get because we still keep the meme that you need to work to be a decent human being. A lot of unsustainable make-believe work. The so-called "bullshit jobs".
It's high time for the world to embrace that jobs are going away, as they should.