Two Articles On Inequality and One Defending RBC

First, Galbraith makes the old Keynsian argument that inequality makes the economy unstable.  Note that this is not a particularly mainstream Keynesian view and, for example, Krugman does not buy it. Interestingly, although Raghuram Rajan comes from the other end of the political spectrum from Galbraith, he seems to agree for somewhat different reasons. 
Another article is about Edward Conard who just wrote a book claiming that inequality is the best thing ever and that we need more inequality in the US.  He is a really rich Wall Street guy who seems like a character out of Margin Call, but he got a bunch of book endorsements from smart people, and he has some interesting things to say. 
The last article is a rare defense of RBC in the popular media. I almost never see a defender of RBC attempt to explain it to lay people because it does not make any sense, so this is a gem.  The author argues that fluctuations in technology (including the weather as a kind of technology) cause recessions by making the economy less productive during recessions when the technology (weather) turns bad. Thus the 2008 recession happened because we suddenly became less productive.  RBC does a great job of describing recessions in primitive agricultural economies where the weather really does mostly determine output because bad weather really does make agruculture less productive, but weather is a poor analogy for technology.  How could there be a great forgetting of productive technology that works  like a massive drought and makes us less productive than we were a year before?    RBC is vague on the specific cause of any recessions and does nothing to explain the housing bubble. RBC theorists never specify what specific technology decline (or adverse weather) caused the 2008 recession.  Instead, they often resort to vague mentions of 'confidence' which is an area that Keynesians have actually studied extensively as Cassidy discusses in his book, How Markets Fail.
Even though I disagree with each of the three articles, each author is smart in his own way and there are grains of truth in each argument:

1. Gailbraith: Inequality of borrowing is part of the core Keynesian story.  During a recession, some people have too much money and are not spending it and others have too little and cannot spend it and so there is a shortage of spending.  Inequality can contribute to economic instability via political channels if nothing else.  Highly inequal societies usually have poor economic growth. 
2. Conard: Too little material inequality can also be a problem as in the case of Cuba and North Korea. On the other hand, you can argue that these countries are not very equal in a more important dimension than market goods.  They have extremely high political inequality because the political elites have absolute power whereas everyone else has less political power than an impoverished voter in a democracy. 
3. RBC Guy:  It works well for explaining recessions in ancient Greece, Robinson Caruso, and to a lesser extent during the 1970s oil shocks. 

SR vs. LR Unemployment and Economic Growth

Moneybox:

Short business cycle downturns like the ones the United States had in the 1950s and 1960s shouldn't have any real long-term consequences even if they're severe. But prolonged spells of mass unemployment provoke things like the current trend of European employers reducing investment in skills training since if there's going to be a surplus of potential workers and a deficit of potential customers, high-investment firms are going to lose out unless they hit incredible home runs.

The same logic should apply to "hard" capital investments as well. When I was in Paris last fall, I was interested to see that Parisian McDonaldses have computer kiosks where customers can place orders without taking up the time of a human cashier. Rival fast food chains like KFC and Quick didn't yet seem to be using this technology and McDonalds was only employing it to a limited extent. If France was facing a high-demand tight labor market scenario for the future presumably McDonalds would double-down on this bet and rivals would either match their productivity-enhancing capital investments or else be displaced by McDonaldses high productivity model. But instead France has had, and looks scheduled to continue to have, a long period of depressed demand and elevated unemployment. Firms have little reason to spend money insuring themselves against workers quitting in search of higher wages and little reason to believe that increased output will actually be purchased.