assumes that the government is better than the private market at marshaling idle resources to produce useful stuffUnemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out…A much more plausible starting point is a multiplier of zero. In this case, the real GDP is given, and a rise in government purchases requires an equal fall in the total of other parts of GDP—consumption, investment, and net exports. In other words, the social cost of one unit of additional government purchases is one. This approach is the one usually applied to cost-benefit analyses of public projects. In particular, the value of the project (counting, say, the whole flow of future benefits from a bridge or a road) has to justify the cost of the public outlay.
In designing effective policy responses, much more focus should be on incentives for people and businesses to invest, produce, and work.