Jobs have to come first. We are already seeing cyclical unemployment turn into structural unemployment – and that permanently lowers output and increases deficits. [MMT economist] Stephanie Kelton is right when she says that “as long as unemployment remains high, the deficit will remain high.”
When the private sector is not willing or able to step up to the plate, then government has to.
Ed points out that, moreover, just increasing aggregate demand through stimulus is generally politically co-opted, channeling the stimulus to the influential rather than toward creating effective demand.
Trader's Crucible pointed out in a recent post that MMT economist Pavlina Tcherneva observed:
“As already noted, for Keynes, the principal goal of fiscal policy was to secure true full employment and the principle measure for adjudicating among different policy responses was their employment-creation effects (Kregel 2008). Unfortunately, what is considered to be Keynesian policy today is largely a misinterpretation of the Keynesian prescriptions, which largely stems from a fundamental misidentification of Keynes’s theory of effective demand with the theory of aggregate demand (Tcherneva 2011). In the General Theory, Keynes carefully articulated that employment determination depended not on the volume of aggregate demand but on the point of effective demand which was very hard to stabilize and fix at full employment.”(emphasis added)