As economic adversity continues to spread, from Athens to Madrid, London to the Beltway, austerity has become a most dangerous idea. What now dominates the world is the popular theory that if countries just tighten their belts, strong growth and lower unemployment will soon follow. It is the opposite of the Keynesian lessons learned from the Great Depression and is supported by neither historical nor empirical evidence. The world’s leading economic commentators, Nobel Laureate Paul Krugman of the New York Times and Martin Wolf of the Financial Times, have regularly railed against austerity, but to little avail.

Advocates of austerity…