The right response is for government agencies and the Fed to undertake efforts to close the gap from both sides in an orderly way through such steps as: making mid-course corrections to the relief efforts to ensure greater effectiveness; designing new recovery plans that target high, inclusive and sustainable growth, thereby avoiding a repeat of the 2008 mistake of winning the war but failing to secure the peace; and paying much greater attention to mounting moral hazard in financial markets and the associated risk of future financial instability that could contaminate the real economy.
The more fortunate segments of society also have an important role to play, motivated both by collective and individual interests. More companies should be stepping up their social responsibility efforts. Just like the public sector, this should focus both on relief (donations to food banks, for example) and on recovery (for instance, helping, both solo and working with others, in establishing retraining and retooling programs for low-cost jobs that are not coming back).
Some will be tempted to argue that the current stark contrast in the fortunes of Main Street and Wall Street is unavoidable. Forced by the structure of the economy and policy apparatus, it’s an unpleasant stop on a potentially successful recovery journey. Others will see it as a repeated illustration of the extent to which the system has been co-opted to serve those already privileged, both in the good and bad times.
Whatever your viewpoint, we should all agree on the urgent priority of doing more now to ensure an orderly recoupling that delivers a quick and more inclusive recovery in the context of genuine financial stability.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide."