Now What?

REMEMBER WHEN all of this was unthinkable? More than 20 million out of work in the U.S. China seizing up. The oil market collapsing, entire industries—airlines, professional sports—shutting down.

- EDWARD ROBINSON

It seems a calamity of this magnitude should have been a thing of the past. And yet here we are, confronting the reality that a virus 400 times smaller than the diameter of a human hair has exposed the weaknesses of our globalized economy with ruthless indifference. The crisis is a rupture between the world we knew and the one that’s coming.

The question now is, what will this new world look like?

For all of the initial hopes that things would snap back to normal with a V-shaped recovery once the Covid-19 disease was suppressed, it’s becoming more likely that a protracted, L-shaped path lies before us. Ben Bernanke, the former chairman of the Federal Reserve who managed its response to the 2008-09 crash, says the U.S. economy has little chance of truly rebounding until the virus is defeated and people feel safe enough to resume their life.

Yet he also says the swiftness and scale of Washington’s reaction to the economic crisis—the Fed and Congress are on course to deploy more than $6 trillion in support for businesses and households—should prevent it from unfolding like the Great Depression, a 10-year slog worsened by policy errors and inaction. “If we are patient and do what we should be doing, we will come out all right on the other side,” Bernanke said in a webcast conducted by the Brookings Institution in April.