The novel voodoo

Scott Sumner sums up contemporary stimulus proposals well

...Old hydraulic Keynesianism from the 1960s was already a pretty implausible model. But what's happened since 2009 involves non only ane , but at to the lowest degree v novel types of voodoo: 

1. The claim that artificial attempts to forcefulness reward higher volition boost occupation , past times boosting AD.

2. The claim that extended unemployment benefits---paying people non to work---will Pb to to a greater extent than occupation , past times boosting AD.

3. The claim that to a greater extent than regime spending tin dismiss genuinely trim down the budget deficit , past times boosting AD too growth. Note that inwards the uncomplicated Keynesian model , fifty-fifty amongst no crowding out , monetary offset , etc. , this is impossible.

4. More aggregate need volition Pb to higher productivity. In the one-time Keynesian model , to a greater extent than AD boosted increment past times increasing occupation , non productivity.

5. Fiscal stimulus tin dismiss boost AD when non at the zilch saltation , because . . . ?

In all v cases in that place is close no theoretical or empirical back upward for the novel voodoo claims , too lots of prove against. There were 5 attempts to force reward higher inwards the 1930s , too all 5 failed to spur recovery. Job creation sped upward when the extended UI benefits ended at the starting fourth dimension of 2014 , reverse to the prediction of Keynesians. The austerity of 2013 failed to dull increment , reverse to the predictions of Keynesians. United Kingdom had mayhap the biggest budget deficits of whatsoever major economic scheme during the Great Recession , labor increment has been robust , too withal productivity is instantly genuinely lower than inwards the quaternary quarter of 2007.