This excerpt originally appeared in The Atlantic on April 24, 2012.

How could extra government spending shrink the private sector? Well, in the simplest Keynesian model, it can't. You have to add some bells and whistles--let's call that "reality"--to get a multiplier less than one.

Here's one path to a tiny multiplier: Let's suppose the government is trying to find the right person for the job. Now, what if that person already has one....