He never actually suggested that. What he did argue was that if you put people to work and pay them for it that's better for the economy as a whole than if the

He never actually suggested that. What he did argue was that if you put people to work and pay them for it that's better for the economy as a whole than if they did nothing and earned nothing, even if the work they do is of low (perceived) value. Digging holes and filling them back in is simply an extreme example to emphasize the point. The reasoning is of course a pretty standard demand-side argument: giving more people more money causes more money to be spent, which boosts the economy.