So am I saying that you can have full employment based on purchases of yachts, luxury cars, and the services of personal trainers and celebrity chefs? Well, yes. You don’t have to like it, but economics is not a morality play, and I’ve yet to see a macroeconomic argument about why it isn’t possible.
I think you can have a full employment situation with a lot of wealth and income inequality, but we aren't currently in a full employment situation. I think Krugman would agree that to speed the recovery, a $1 increase in food stamps would be more beneficial than a $1 tax cut for Richie Rich. Direct transfers from rich to poor would speed the recovery. I think it reasonably follows that if the poor were more prosperous, that the recovery would be faster. Their propensity to spend an additional dollar is higher. If they had a few more dollars, they'd spend those too, if only to their payday lender.