The Year 2000 "Crisis"

An Inquiry Into The Veracity of
"Millennium Bug" Doomsday Predictions

Abstract. Over the past several years, and with increasing frequency, there have been reports of impending disaster caused by the inability of some computers and associated systems and devices to handle the date change to the year 2000. While these reports are grounded in the fact that such a date calculation problem exists, the severity of the results predicted by various prognosticators is often exaggerated. These predictions frequently refer to this date problem, Y2K as it is commonly called, as having consequences similar to the black plague of the 14th century. In fact, after a survey of the evidence, the occurrence of such a disaster now is only a very remote possibility, the most likely outcomes ranging from either a spate of annoying systems failures to the worst likely outcome, a moderate economic recession affecting both the United States and other nations.

 Recent headlines in respectable papers throughout the nation have been proclaiming the coming apocalypse. This is not entirely unexpected, human nature being what it is, considering the approaching millennium. Nor is it the first time that a society has looked into the future and found the prospect of immense change looking back.

Today, as we face the dawn of a new millennium, innumerable modern seers foretell of momentous events coming with the dawning of the year 2000. These forecasters are predicting the destruction of modern man based on the perception that our dependence on computer technology is also our Achilles’ heel. According to these prognosticators, a problem known as the millennium bug (Y2K) will plunge our high-tech society back into a period of darkness the likes of which the world hasn’t seen since the fall of Rome. Their arguments seem well-reasoned and completely plausible to many in our technologically advanced, yet still technophobic, modern society. Closer examination of the Y2K situation, however, leaves plenty of room for hope.

The Nature of the Bug

In the 1950’s and 1960’s when the first computers were becoming popular among large businesses, computer memory was very expensive. As a result, the programmers whose job it was to make these early computers function devised a simple method to save some room—in any situation that called for a date, the year was represented with just the last two digits. Thus, these computers recognized "71" as meaning 1971. The proclivity of programmers to use this two-digit format remained unchanged during the coming decades. Now, because of the impending switch to the year 2000, computers thus programmed will recognize 00 as 1900, not 2000. So, due to this inadvertent failure to account for the future, ATMs might think a credit card with an expiration date of 2001 really expired in 1901 and will accordingly reject the card as expired. In a similar manner, it is thought, computers the world over will malfunction because they cannot fathom the year 2000. Additionally, some programmers, in rare instances, may have used a combination of nines, like "99" or "9999" (Sept. 9, 1999) to signal that the computer should perform some particular function, such as shut down. Thus, September 9, 1999, could, in rare instances, also be the date when some computer systems malfunction. Other malfunctions could occur when computers attempt to make forward calculations into and beyond the year 2000.

What Computer Systems Are Affected

The millennium bug affects a variety of computer platforms and systems. Mainframes, networks, minicomputers, and even some microcomputers (like your 2-year-old PC) and embedded systems could be affected. Mainframes programmed in the COBOL language are likely to be particularly prone to Y2K problems according to c/net’s article "8 Myths About The millennium Bug."¹ Therefore, any organization using mainframes (and a great many corporations and government agencies do) will likely need to upgrade their system to avoid millennium trouble.

Additionally, some PC’s could be susceptible. According to Pete Woytovech, senior programmer for Dell BIOS Development, "most of the personal computers (PCs) in operation today will be unable to advance their hardware-based system dates to the year 2000 without intervention through the system BIOS (basic input/output system)."² Such intervention can be performed readily, however, and, for those who don’t know how, there are many manuals available on the web and in your local bookstore that can help with the process. Laura DiDio also discussed the problem between the PC’s Real Time Clock and BIOS in the April 13, 1998 issue of Computer World: "On Jan. 1, 2000, the PC’s Real Time Clock will roll over to either the year 2000, 1980, or 1900, depending on the make and model of the computer."³ Computer World also published the results of a recent survey of 500 BIOS systems. The survey found that "93% of pre-1997 PCs failed," that "47% of 1997 PCs failed" and that the "results varied from PC to PC, even among BIOS versions identical in name and date."⁴ However, it is important to point out that not all PC’s will be hampered by the date change and those that will malfunction can be readily updated.

More good news comes from Apple Computer. The estimated 55 million or so users of that company’s Macintosh will be, on their own computers anyway, unaffected by the date change. According to Apple’s Technote: Approaching the millennium: The Mac and the Year 2000, "All Mac OS date and time utilities have correctly handled all issues related to the year 2000 since the introduction of the Macintosh."⁵ The original Macintosh can recognize dates successfully until 6:28:15 a.m. on February 6, 2040. All newer Macs cover dates from 30081 B.C. to 29940 A.D. Of course, while Apple’s hardware and operating system is completely compliant, this fact alone is no guarantee that third-party or custom software will be compliant.

Another batch of systems that may be adversely affected by the change to 2000 are those commonly referred to as "embedded chips." These are small chips that help make a great number of consumer and industrial goods function. They are in cars, VCRs, televisions, and industrial equipment. According to a recent article in The Economist, "Giga Information Group, a Massachusetts consultancy, reckons that 5% of all embedded chips—which could amount to millions of devices—will fail the date test."⁶ The article goes on to note, though, that experts in such chips don’t consider this to be much of a problem:

They say that most such chips track not the date, but rather the time elapsed since an event. And even when embedded chips fail, it is rarely a disaster. Video players flash "12:00" most of the time anyway. The worst a security system or lift is likely to do is go into hibernation until fixed. Voice mail may give the wrong time-stamp, as might a fax machine.⁷

This was also the conclusion reached by Jim Wilson, science and technology editor for Popular Mechanics magazine, in his recent article, "I’m Okay, Y2K." Wilson observed that "there is less than a sense of urgency about Y2K problems in the estimated 1 billion ‘embedded computers’ that have replaced electromechanical control devices in everything from electric irons to elevators."⁸ In discussing this conclusion, Wilson referred to a statement by Janet Flynt, a research engineer for Underwriters Laboratories. She commented that "At this time, UL does not intend to issue a mark exclusively to address the year 2000 problem," she said. ⁹

It seems reasonable to conclude, then, that failures in embedded systems will prove to be simply annoying in most of the situations in which they fail and therefore will not likely cause the downfall of mankind.

Doomsday?

Based on the fact that all of the above-mentioned systems could be affected by millennial problems, the forecasters of doom claim that man’s cozy little technological utopia is about to come crashing down. In fact, if the problem was completely ignored and absolutely no steps were taken by anyone to come to terms with it, then society would indeed face serious consequences. That few are ignoring the coming date change and, in reality, much progress is being made in most sectors of the economy and even in some government agencies, will be discussed later. However, many prognosticators are still looking at Y2K as if it is being completely ignored.

Gary North, editor of Gary North’s FireStorm Chats, and Remnant Review, is one forecaster who sees the year 2000 problem as being extremely worrisome. Mr. North maintains that the millennium bug is going to wreak havoc on modern society: "On January 1, 2000, the world’s computers either shut down or go haywire. So will everything dependent on them.…"¹⁰ Bruce Tippery, publisher of North’s "Fireside Chats," is more alarmist. He states in An Urgent Letter From The Publisher of Gary North’s FireStorm Chats that the Y2K problem will "be known as the greatest social, political and financial crisis mankind has faced since the great plagues of the 14^th century that wiped out one-third of Europe."¹¹ North explains this problem in more detail and discusses its inevitability in Remnant Review:

If the repairs are not coordinated by a standardized approach—and none exists—then one of two horribly destructive things will happen: (1) uncorrected computers will send their corrupt data into the corrected computers, making them noncompliant, or (2) corrected computers will "lock out" all data from uncorrected computers. In the first case, the reliability of all computers in the data-transfer system will be ruined. In the second case, the overall system will disintegrate because the uncorrected computers are locked out. There will be no more "system." There is no third option except compliance in the unregulated system, which is managerially impossible to achieve.¹²

In summary, Mr. North, maintains that computers will fail, resulting in the stoppage of goods and services in the market as well as the stoppage of government services. A key point to be drawn from the above quote is the certainty that most Y2K problems cannot be averted. Some computer software experts, however, are much more optimistic than Mr. North. Nicholas Zvegintzov, a software management consultant, is one of these. He minimizes the problem:

Dealing with the Year 2000 problem is a simple software task. It is clear when the problem arises (at the end of the century). It is clear what it will do (confuse calculations performed with dates). The places where the problem arises are easy to find in software code (places where dates and times are represented and manipulated, places where fields of two decimal digit are used). The corrective action to be taken is straightforward (substitute a time and date representation with a longer horizon). Solving the Year 2000 problem is an exercise for the software novice.¹³

Certainly, Zvegintzov’s analysis seems optimistic in the extreme and not all computer users will have such an easy time fixing their problems, but it does indicate that not everyone familiar with the "millennium bug" is convinced that it will precipitate digital Armageddon.

One of the challenges which individuals have in evaluating the claims of Mr. North and several others is that they obviously stand to gain from creating a measure of fear. For example, each of Mr. North’s publications discusses the potential occurrence of serious problems and then advises that it might be best to find out more. One way to do that is to get more of Mr. North’s publications. This is the tactic used in Remnant Review, An Urgent Letter From The Publisher Of Gary North’s FireStorm Chats, and another letter from Tippery, The Day The World Shuts Down. Creating fear and offering a product to solve the fear is not a new sales technique nor does it imply anything improper so long as the fear is based on fact. But the prudent buyer will recognize the bias of the salesman in the claims that are made.

Gary North is not the only forecaster to see serious Y2K trouble ahead. Mr. Donald S. McAlvany also predicts that the Y2K bug will have disastrous consequences. "…the year 2000 represents the meltdown of our high-tech computerized world—a cyber-nightmare that could crash the global financial system and throw governments, economies, transportation, power generators, and our entire high tech civilization into total chaos and gridlock."¹⁴ In fact, he is quite sure of his predictions: "Of all the year 2000/millennial scenarios, the one that is guaranteed to occur [emphasis added], beginning at midnight on December 31, 1999 is the coming computer crisis." ¹⁵

To help people overcome the problems he predicts, Mr. McAlvany, like many others, provides certain products and services. Enclosed with the McAlvany Intelligence Advisor are two or three attractive flyers. The first is a description of the Don McAlvany SuperPack Gourmet Reserve Provisioning System, a one year supply of non-perishable food for two people. This provisioning system is designed to provide emergency rations in times of extended emergency, like that predicted for the year 2000. Also available are three other similar emergency provisioning packages that provide enough food to survive for six months to one year. Prices range from $993.59 to $5,066.63. Another flyer advises readers to buy gold and silver in the event that a Y2K related collapse of the financial services industry results in the destruction of the liquidity of the world’s fiat money. This gold and silver can also be purchased by calling Mr. McAlvany’s offices.

North and McAlvany are not alone in trying to profit from fear over Y2K. There are numerous information technology consulting firms that also stand to gain tremendously. One of these, the Gartner Group (a consulting group whose research services cost corporations $20,000 per year),¹⁶ has said in an oft quoted estimate that the millennium bug could cost more than $600 billion to fix.¹⁷ "Systems integrators, software companies, and consultants shift into salivary-gland overdrive at the mention of that kind of money," says Scott Kirstner writing for Wired News.¹⁸ This figure serves to reinforce the notion that the world is at tremendous risk and, consequently, it heightens the sense of panic felt by all those individuals and entities that could potentially be affected. It is, therefore, part of that positive feedback loop that seeks to drum up business for those people and groups that stand to make a profit. And so, Gartner Group, McAlvany, North and countless others stand to gain revenue by garnering publicity for their claims. "Thus, it should come as no surprise that many of the ‘industry analysts’ who foretell Y2K doom also sell Y2K ‘solutions,’" says Rebecca L. Eisenberg in her column in the San Francisco Examiner.¹⁹ Nicholas Zvegintzov agrees and calls the hype over Y2K a "racket." "The racket treats the Year 2000 problem as huge, difficult, dangerous, and unique," says Zvegintzov. "There are doom-laden articles in the newspapers, expensive conferences, collections of articles such as the one you hold, service offerings by consulting groups, special software tools, internet news pages. This is the Year 2000 racket—the problem is free, but the solutions are for sale."²⁰ Since it is evident that those forecasting the worst outcomes for the year 2000 and the individuals and groups that have the most to gain from creating hysteria are one and the same, it seems reasonable and prudent to question their claims.

Who Is Ed Yardeni?

Mr. Edward Yardeni, who has been actively discussing the Y2K problem, is chief economist for the huge financial services firm Deutsche Morgan Grenfell. Yardeni has held numerous other prestigious positions in financial services and has taught at Columbia’s graduate school of business. He is, as a further review of his credentials shows, highly placed in the ranks of the elite. He was an economist with the Federal Reserve Bank of New York and his academic credentials are impressive: He holds a masters degree and a Ph.D. in economics from Yale University. Unlike those groups and individuals discussed above, Yardeni does not, though, seem to have anything to sell, per se, and the company for which he works does not base its profits on the creation of hysteria. Therefore, based on these facts, his claims about Y2K should be taken more seriously. However, as will be seen, he uses his analysis of the Y2K problem to propose internationalist and collectivist policies.

Yardeni is most famous recently for his prediction that the millennium bug could cause a recession. This prediction, however, is an important point that further distinguishes him from other commentators. Where many others see the worst event since the black death of the 14^th century, Yardeni is saying that there is a 60% chance of a recession.²¹ This sounds bad but is it really a disaster? Since 1970, there have been at least three recessions and none of them have prevented us from reaching the technologically and economically advanced position in which we currently find ourselves. Further, survival rations were not needed to make it through even the worst of these recessions. So, while the advent of a recession would be unpleasant, it certainly would not be doomsday. In this regard, Yardeni’s analysis of the problem can serve to defuse the hysteria created by the various forecasters of doom.

Yardeni does, however, advocate anti-Americanist, pro-socialist actions that would be dangerous and counter-productive. In a recent article in The Wall Street Journal, he claims that "Fixing and responding to Y2K requires a cooperative and collective approach.…"²²

That Yardeni would make such a statement is surprising considering his past views. In 1990, along with historian David Moss, Yardeni authored a paper entitled The Triumph of Adam Smith in which he noted "Adam Smith’s predictions have been remarkably accurate."²³ Smith, of course, was the 18th century anti-mercantilist English philosopher/economist whose masterpiece, An Inquiry Into the Nature And Causes of the Wealth Of Nations, remains to this day the backbone of all economics. Yardeni correctly summarizes Smith’s argument in his paper "that the competitive market, as if by an ‘invisible hand,’ transforms self-interest into a force for public good."²⁴

Yet, after celebrating Smith as being correct in his conclusions, Yardeni now, with his statement in the Journal, has completely reversed his position. In Smith’s view, businesses would fix their own Y2K problems because it would be in their own self-interest to do so and once they had, of course, Y2K would cease to be a problem for society. By advocating a collectivist approach to Y2K jointly involving nations and businesses, Yardeni is stating that businesses will not act in their own self-interest. Because the balance of evidence overwhelmingly indicates that businesses and individuals do act in their own self-interest, Yardeni’s reversal on this remains puzzling.

Puzzling indeed, but also a threat to liberty. Yardeni, in his Journal article, outlines his proposal for an "International Year 2000 Alliance…to deal comprehensively with the worldwide Y2K problem."²⁵ This alliance would have the power to oversee governments and businesses around the world to ensure that they are taking the appropriate steps to fix the problem. It would even, in Yardeni’s scheme, have the authority to dictate employee scheduling: "The Y2K Alliance should consider requiring all nonessential employees to stay home during the first week of January 2000."²⁶ This proposal, in effect, would result in a global economic planning agency reminiscent of the Soviet Union’s GOSPLAN, but on a global scale. To put this plan in motion, Yardeni proposes that "The Year 2000 Alliance should further require all members to fund a Y2K emergency budget with an initial minimum balance of $100 billion."²⁷ All-in-all, Yardeni’s proposal is bad political-economy that won’t clean up the millennium bug but will go a long way to destroy liberty and sovereignty.

With various collectivist/globalist leaders in office, including Bill Clinton and Tony Blair, and the increasing power of various international governmental and regulatory organizations, it would not be a surprise to see an attempt to create just such a sovereignty shredding international agency, especially since Yardeni also delivered this proposal to influential banking attendees at the Bank for International Settlement’s Year 2000 Roundtable in Basle, Switzerland. The millennium Bug, in fact, could be used as a pretext for international controls irrespective of the seriousness of the problem. It could even be cited as the underlying cause of a global recession, should one occur, regardless of its actual relationship to such an event.

How Are We Really Doing On Y2K Preparedness?

Any organization utilizing computers could be affected by the date change. But certain industries are more prone to problems than others. Which ones are in the worst condition?

The electrical utilities have been accused of being seriously in danger of disruption at the beginning of the year 2000. An example of this allegation comes from Don McAlvany:

The national power grid (a complex matrix of public power utilities, dams, nuclear power plants, etc.) is completely computer dependent and may be the most important system at risk.

Every participant in the grid must be Y2K compliant if the system is to be compliant. If 20% of the grid goes down, it could pull down the rest of the grid with it, giving us the "mother of all electrical blackouts"—making the present power failures in the northeast U.S. and eastern Canada, in New York in the 1970s, and in the Western states over the past year look very minor by comparison. A major depression, social upheaval in American cities, widespread food shortages, and a "state of national emergency" would only be a few of the results of such a failure.²⁸

The article "8 Myths About the millennium Bug," by Matt Rosoff in c/net, serves as one useful counter to such assertions. Rosoff notes about the electrical companies that power would continue to flow, but "If the bug were left untouched, problems might occur with billing systems, regulatory compliance schedules, and maintenance schedules…"²⁹ To support this claim, Rosoff talked with Leonard Anderson, the spokesman for Pacific Gas & Electric’s Y2K team. "To try and tie the flow of power into the year 2000 effort is pure speculation," Anderson told c/net. "Most power is routed manually. Much is being controlled by the systems themselves—if equipment on the lines detects an overload, they’ll automatically shut down to protect the system."³⁰ This automatic protection of the grid from overload is much like the breaker or fuse that protects a home’s circuitry from overload. These breakers and fuses don’t care what year it is. Other analysts agree that power generation is not at risk. Rebecca L. Eisenberg in her San Francisco Examiner column, "Net Skink," argued that it was unlikely that electric utilities would fail. She noted that "In the case of electric companies, date-coding plays only a minor role in the production of electricity, but it plays a crucial role in the metering of electricity use."³¹ Accordingly, Tom Oleson, director of research for the market research firm IDC Research, told her that "They [utilities] may have a Y2K problem, but you can bet that they are going to solve it because they want to charge and make money, which without working meters they cannot."³² Considering this, it seems unlikely that the millennium bug will have a serious, long-lasting effect on power generation and distribution.

Of all the sectors of the economy that are susceptible to Y2K failures, the one that is most at risk due to its necessary and extensive use of dates and of computer technology to handle dates is the financial services industry. Furthermore, this industry stands at the center of the modern economy. A severe disruption in this industry’s ability to process transactions would certainly cause the kind of turmoil expected by North, McAlvany, and others. The importance of compliance in this industry was underscored by Edward W. Kelly, Jr., from the Federal Reserve’s Board of Governors in testimony to the House Committee on Banking and Financial Services. Kelly told the committee on November 4, 1997 that "there probably isn’t anything that’s more critical than having financial institutions compliant" with Y2K.³³ This sentiment was echoed by the report of the Basle Committee on Banking Supervision. Their report, entitled The Year 2000: A Challenge For Financial Institutions And Bank Supervisors, noted that "Failure to address this issue in a timely manner would cause banking institutions to experience operational problems or even bankruptcy and could cause the disruption of financial markets."³⁴ If banks, and particularly large banks, fail due to Y2K (or any other reason), the resulting freeze of liquidity could result in rapid deflation and economic depression (thus, McAlvany’s suggestion to buy hard currency).

A survey of the status of the financial services industry does bring out some good news, however. Senator Robert Bennett, Chairman of the Senate Subcommittee on Financial Services and Technology, discussed some of the results of his hearings on this subject with the House Committee on Banking and Financial Services. He told the House committee that "We found that the larger banks generally are moving forward in a proper fashion to get this [Y2K compliance] done.…"³⁵ Further, another major component of our fractional reserve banking system, the Federal Reserve, is in fairly good condition relative to Y2K compliance. According to Federal Reserve Governor Edward W. Kelly in his testimony to the House Committee on Banking and Financial Services, "We have completed our assessments and internal test plans and are currently renovating and testing software, a very large job that is scheduled to be completed by year-end, 1998. Further, our critical financial systems will be year 2000-ready by mid-1998, when we will commence testing with financial depository institutions."³⁶ In his statement, Kelly said:

Generally speaking, the nation’s largest banking organizations have done much to address the issues and have devoted significant financial and human resources to preparing for the century date change. Many larger banks are already renovating their operating systems and have commenced testing of their critical applications. Large organizations seem generally capable of renovating their critical systems by year-end 1998 and will have testing well under way by then.³⁷

More good news from the financial services industry comes from Nick Magri, coordinator for the Y2K project at the Securities Industry Automation Corporation. He told Matt Rosoff of c/net that "The securities industry started on this a year and a half ago. The bigger businesses we see a lot of, and they’re on top of it."³⁸

Despite this good news from the financial services industry, there is also a measure of bad news. In his statement to the House Committee on Banking and Financial Services, Senator Robert F. Bennet also noted that "smaller banks, community banks, credit unions [were] behind the curve.…"³⁹

This would seem to be reflected in a GAO report cited by a Cox News Service article that was picked up by the Houston Chronicle for their Wednesday, February 11, 1998 edition. The article, entitled "’Millennium Bug’ Could Close Banks, GAO Warns," noted that "Government Watchdogs warned Tuesday that as many as 700 banks could be forced to close their doors on Jan. 1, 2000, if their check-clearing software succumbs to the ‘millennium bug.’"⁴⁰ There was no indication that these unnamed banks would need to remain closed permanently, but the report seems chilling at first glance. However, bank failures have not been rare events in the last two decades. An FDIC report entitled History Of The Eighties—Lessons For The Future, attempts to explain the high number of such failures between 1980 and 1994. How many failures? According to the report, "Between 1980 and 1994, more than 1,600 banks insured by the Federal Deposit Insurance Corporation (FDIC) were closed or received FDIC financial assistance—far more than in any other period since the advent of federal deposit insurance in the 1930s."⁴¹ In fact, during the period 1988-89 alone, there were nearly 300 bank failures, according to the FDIC report.⁴² Keep in mind that this report is not taking into account the approximately 1,300 savings and loans institutions that also failed between 1980 and 1994.⁴³ Put in this light, the threat of problems with the 700 banks identified by the GAO report, though worthy of concern, seems slight, especially since these banks may not be permanently affected.

The financial services industry is of central importance to the current economic conditions experienced by the United States. The threat to this sector by the approaching millennium is real and serious. Happily, though, indications seem to be that this important industry is well on its way to compliance. Certainly, some disruptions may occur, but it seems increasingly unlikely that this sector of the economy is on the verge of catastrophic failure. As Edward W. Kelly told the Wall Street Journal, "By no means is it baked in the cake that this is going to be a severe economic disruption or disaster."⁴⁴

Yet another industry that has been the object of much hyperbole concerning the possible deleterious effects of Y2K has been the airline industry. Despite the apocalyptic predictions that seem to dominate our news on this front, it is unlikely to be raining jumbo jets on January 1, 2000. For instance, Tom Browne, the head of the Year 2000 project of the Air Transport Association (representing 27 airlines and shipping companies) told ABC News that "airplanes aren’t going to fall out of the sky. The issue is whether they take off."⁴⁵ The fact is that dates do not prevent airplanes from physically flying, according to the ABC report. As Mary Jean Olsen, a Boeing spokesman told ABC, "The use of dates is very minimal in airplane system software."⁴⁶ The problem faced by airlines, therefore, is scheduling and other aspects of the logistics system needed to keep planes taking off on time. "Are we going to have fuel?" asks Tom Browne. "Are we going to have runway lights? Are we going to have fire trucks?"⁴⁷ In reality, these possible problems will be transitory in nature if they happen at all. Airlines, like other businesses, will act in their own self interest in this matter and will take steps to make sure that fuel, runway lights, and other needs are met. As far as fire trucks go, it is difficult to imagine fire truck operation being dependent on dates. Other problems could involve scheduling flights with travel agencies and the airlines themselves, but none of these hurdles are going to make 747s crash.

The airline industry, though, is one in which private enterprise overlaps with government oversight, and the government may not, in all cases, be as well prepared for the millennium as the private sector. The FAA, in particular, is one government agency about which there has been much speculation. The GAO, in fact, in its report, Year 2000 Computing Crisis: Potential For Widespread Disruption Calls for Strong Leadership and Partnerships, said that

FAA has been severely behind schedule in completing basic awareness and assessment activities. In our January 1998 report, we concluded that at its current pace, FAA would not make it in time. Moreover, FAA had not (1) analyzed the impact of its systems’ not being Year 2000 compliant, (2) inventoried and assessed all of its systems for date dependencies, or (3) developed contingency plans to ensure continuity of operations.⁴⁸

Despite this report, the FAA claims to be doing better than expected. According to a report in the Chicago Tribune, FAA Administrator Jane Garvey told the House Appropriations Transportation Subcommittee that the agency had moved its planned compliance date ahead from November of 1999 to June of that year.⁴⁹ This alone seems to be an indication that the situation is improving. In fact, according to the Tribune, Garvey is certain that flight safety would not be affected. "I can assure the subcommittee that air-traffic safety will not be compromised in the slightest."⁵⁰

Despite her assurances, FAA has not acted in a timely manner. A report in The New York Times indicates that the agency was informed by IBM many months ago that "the computers at the heart of the control centers, which handle high-altitude, long-distance air traffic, were so old that no one at IBM knew how to check them for Y2K problems."⁵¹ Despite the fact that the agency was informed early on, they did not immediately take appropriate steps, a fact about which Rep. Frank Wolf was critical. In a letter to the agency, he asked, "Where has the FAA been on this issue for the past 15 months?"⁵² So, the best that can be said for the FAA is that they were late in beginning, but they seem to be making progress now.

Other agencies are further behind than the FAA. The GAO has been especially critical of the Department of Defense (DoD). In their report, Defense Computers: Year 2000 Computer Problems Threaten DOD Operations, they found that "Most of Defense’s automated information systems and weapon systems computers are vulnerable to the Year 2000 problem.…"⁵³ For example "the Defense Logistics Agency’s Standard Automated Material Management System is used to manage Defense’s vast inventory of supplies. Because it uses dates to automatically target items for deletion, the system erroneously targeted more than 90,000 items for deletion before Defense discovered the problem in 1996."⁵⁴ An even more serious failure occurred during an exercise with the Global Command Control System. GAO noted:

In an August 1997 operational exercise, the Global Command Control System failed testing when the date was rolled over to the year 2000. GCCS is deployed at 700 sites worldwide and is used to generate a common operating picture of the battlefield for planning, executing, and managing military operations. The U.S. and its allies, many of whom also use GCCS, would be unable to orchestrate a Desert Storm-type engagement in the year 2000 if the problem is not corrected.⁵⁵

The GAO report concludes that DoD is not effectively managing its Y2K updates.

Defense lacks complete and reliable information on systems, interfaces, and costs. It is allowing nonmission-critical systems to be corrected even though only a small percentage of mission-critical systems have been completed…And, it has not ensured that essential mission functions can be performed if critical mission systems are not corrected in time.⁵⁶

Clearly, the DoD is not doing too well in dealing with it’s Y2K problems. This department is not alone. The IRS is also facing problems as BusinessWeek noticed:

It’s hard to imagine how things could get much worse for the IRS. It is taking a beating on Capital Hill, it’s struggling to keep up with an ever more complicated tax code, its aging computers are falling apart, and it will soon launch a top-to-bottom management overhaul. Now, the Internal Revenue Service faces a potential calamity: a meltdown triggered by the Year 2000 computer glitch—and the guy in charge of keeping the data systems running just quit.⁵⁷

If this sounds daunting, it is. John Yost, director of the agency’s Y2K program, told Business Week that the plan was to be compliant but that he’s "not making any promises just yet."⁵⁸ But again, as in most cases, the news about IRS compliance isn’t all bad (or good, depending on your position on the income tax). According to the Business Week report, the agency’s older mainframes that are "the backbone of the agency’s data system"⁵⁹ should be compliant well before the deadline since they were programmed by IRS employees. Thus, it has been easier for the agency to fix them because there was more documentation left behind by the programmers and some of the programmers may still be on staff. The problem remains with the many IRS minicomputers and PCs throughout the nation that need to be checked. Alas, the IRS, is in better shape than it seems at first glance.

Some other agencies, however, seem to be doing quite well. The GAO found that the Social Security Administration was "a federal leader in addressing Year 2000 issues."⁶⁰ Also, the GAO found that a number of other agencies, like the Veterans Administration, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, while having much work remaining to do, were, in fact, making progress.⁶¹ So, while the government is probably behind the private sector in achieving compliance and has serious problems in both Internal Revenue and DoD, they are in general progressing surprisingly well. As Sally Katzen, Director of the Office of Management and Budget, told c/net: "We have a high degree of confidence that the important services and benefits will continue through and after the new millennium. It is my expectation that when we wake up on January 1 in the year 2000, the millennium bug will have been a nonevent."⁶²

The Rest Of The World

The preceding information concerns only the United States. Unfortunately, computer systems in the rest of the world also may fail to successfully make the transition to the 21^st century. There is, though, a lack of useful data in existence from which to gauge the extent to which other nations have dealt or are dealing with this problem. One source of information on this has been the Central Intelligence Agency. Sherry Burns, the CIA’s spokesman, noted that a number of governments seem "unprepared for what could potentially be some fairly tough circumstances."⁶³ Those nations doing well, other than the U.S., according to Burns, include Canada , Britain, and Australia at about six months behind the U.S. The Scandinavian nations and the rest of Western Europe are six to nine months behind the U.S., while Russia, Japan, China, Hong Kong, and other Pacific nations are nine months to a year behind the U.S.⁶⁴ This is bad news for the Pacific nations and the Y2K bug could instigate another round of the so-called "Asian Flu" that has been afflicting the economies of many of the Pacific nations over the past year.

Conclusion

Despite the dire predictions from many corners proclaiming the advent of a new Dark Ages, a survey of the evidence indicates that no such disaster is about to befall the United States. Certainly, the millennium bug is a real problem. However, it has been and continues to be dealt with in this country to the extent that truly harmful disaster will likely be averted. However, much work remains to be done and it seems reasonable to expect some business and banking failures. The scope of these failures in this country will likely be limited to some smaller financial institutions and other smaller businesses. Fortunately, the most susceptible and important sector or the economy, the financial services industry, seems well along in fixing its systems. The importance of this cannot be overstated: Failure of the major corporations in this industry would have very deleterious effects on the nation; that they are well along in their repairs and updates is a good sign indeed. Further, malfunctions in government agencies, other than in the Department of Defense at a time of war, would likely not cause the destruction of private enterprise. Thus—in the absence of either a precipitated panic or sabotage intended to create disruption leading to authoritarian controls—it seems unlikely that the beginning of the 21^st century will be accompanied by a Y2K induced disaster and that the worst that could happen would be an economic recession.

—Dennis J. Behreandt
May 29, 1998

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Endnotes

 

1. Matt Rosoff, "8 Myths About The millennium Bug," c/net, www.cnet.com/Content/Features/Dlife/Millbug/index.html, Sept. 10, 1997, p. 1.
2. Pete Woytovech, "The Century Rollover And The PC System Date." Vectors, Dell Advanced Technology Group, www.us.dell.com/r&d/vectors/3/v3_cent, Sept., 1996, p. 1.
3. Laura DiDio, "Y2K Snag Hides In PC Hardware," Computerworld, April 13, 1998, p. 24.
4. Ibid.
5. Brian Bechtel, "Technote: Approaching The millennium: The Mac And The Year 2000," Apple developer Technical Support, Technote 1049-Release 1.0, Apple Computer, Inc., June 17, 1996, p. 1.
6. "Please Panic Early," The Economist, www.economist.com/editorial/freeforall/4-10-97/sf0951.html, April 10, 1997, p. 5.
7. Ibid.
8. Jim Wilson, "Science: I’m Okay, Y2K," Popular Mechanics, January 1998, p. 34.
9. Ibid.
10. Gary North, Remnant Review, Baltimore, 1998, p. 2.
11. Bruce Tippery, An Urgent Letter From The Publisher Of Gary North’s FireStorm Chats, Firestorm Chats Y2K Project 3, p. 1.
12. Gary North, Remnant Review, Baltimore, 1998, p. 5.
13. Nicholas Zvegintzov, "The Year 2000 As Racket And Ruse," Software Management Network, www.softwaremanagement.com/References/year_2000.html, Feb. 4, 1998, p. 3.
14. Donald S. McAlvany, "The millennium Bug: Global Cyber-Meltdown In the Year 2000, Part I," The McAlvany Intelligence Advisor, Feb. 1998, p. 2.
15. Ibid.
16. Rebecca L. Eisenberg, "Year 2000 Hype Is Relentless," San Francisco Examiner, www.examiner.com/skink/skinkApr19.htm, April 19, 1998, p. 3.
17. Matt Rosoff, "8 Myths About The millennium Bug," c/net, www.cnet.com/Content/Features/Dlife/Millbug/index.html, Sept. 10, 1997, p. 6.
18. Scott Kirstner, "2000: Year Of Chicken Little?" Wired News, www.wired.com/news/business/story/5157.html, July 14, 1997, p. 1.
19. Rebecca L. Eisenberg, "Year 2000 Hype Is Relentless," San Francisco Examiner, www.examiner.com/skink/skinkApr19.htm, April 19, 1998, p. 3.
20. Nicholas Zvegintzov, "The Year 2000 As Racket And Ruse," Software Management Network, www.softwaremanagement.com/References/year_2000.html, Feb. 4, 1998, p. 1.
21. Edward Yardeni, "Y2K—An Alarmist View," The Wall Street Journal, May 4, 1998, p. A22.
22. Ibid.
23. Edward Yardeni and David A. Moss, The Triumph Of Adam Smith, Prudential-Bache Securities Topical Study #19, July 17, 1990, p. 2.
24. Ibid.
25. Edward Yardeni, "Y2K—An Alarmist View," The Wall Street Journal, May 4, 1998, p. A22.
26. Ibid.
27. Ibid.
28. Donald S. McAlvany, "The millennium Bug: Global Cyber-Meltdown In the Year 2000, Part I." The McAlvany Intelligence Advisor, Feb. 1998, p. 3.
29. Matt Rosoff, "8 Myths About The millennium Bug," c/net, www.cnet.com/Content/Features/Dlife/Millbug/index.html, Sept. 10, 1997, p. 4.
30. Ibid.
31. Rebecca L. Eisenberg, "Year 2000 Hype Is Relentless," San Francisco Examiner, www.examiner.com/skink/skinkApr19.htm, April 19, 1998, p. 4.
32. Ibid.
33. Millennium Bug: Banking And The Year 2000 Computer Problem, House of Representatives, Committee On Banking And Financial Services, Nov. 4, 1998, p. 23.
34. The Year 2000; A Challenge For Financial Institutions And Bank Supervisors, Basle Committee On Banking Supervision, Sept. 1997, p. 1.
35. Millennium Bug: Banking And The Year 2000 Computer Problem, House of Representatives, Committee On Banking And Financial Services, Nov. 4, 1998, Page 5.
36. Ibid.
37. Edward W. Kelly, Jr., "Statement by Edward W. Kelly, Jr., Member, Board of Governors of the Federal Reserve System, Before The Committee On Banking And Financial Services, U.S. House Of Representatives, Nov. 4, 1997," Federal Reserve Bulletin, p. 28
38. Matt Rosoff, "8 Myths About The millennium Bug," c/net, www.cnet.com/Content/Features/Dlife/Millbug/index.html, Sept. 10, 1997, p. 4.
39. Millennium Bug: Banking And The Year 2000 Computer Problem, House of Representatives, Committee On Banking And Financial Services, Nov. 4, 1998, p. 5.
40. "’Millennium Bug’ Could Close Banks, GAO Warns," Houston Chronicle, Cox News Service, Feb. 11, 1998, p. A12.
41. History Of The Eighties—Lessons For The Future, Federal Deposit Insurance Corporation, Division of Research and Statistics, Dec. 1997, p. 3.
42. Ibid.
43. Ibid.
44. David Wessel, "Year 2000 Is Costly, But Not Catastrophic," The Wall Street Journal, May 4, 1998, p. A1.
45. Chris Stamper, "Airlines Battle The 2000 Bug," ABCNEWS.com, www.abcnews.com/sections/tech/DailyNews/fly2k980426.html, May 7, 1998, p. 1.
46. Ibid.
47. Ibid.
48. Year 2000 Computing Crisis; Potential For Widespread Disruption Calls For Strong Leadership And Partnerships, United States General Accounting Office Report To Congressional Requesters, April 1998, p. 6.
49. Jon Hilkevitch, "FAA Upbeat On Computers For Year 2000," Chicago Tribune, March 11, 1998, p. 5.
50. Ibid.
51. Matthew L. Wald, "Year 2000 Raises Safety Risk For Air Traffic Computers," The New York Times On The Web, Jan. 13, 1998.
52. Ibid.
53. Defense Computers; Year 2000 Computer Problems Threaten DOD Operations, The United States General Accounting Office Report To Congressional Requesters, April 1998, p. 5.
54. Ibid.
55. Ibid.
56. Ibid.
57. Howard Gleckman, "Hey, I Owe 99 Years In Back Taxes!" Business Week, www.businessweek.com/premium/08/b3566148.htm, Feb. 12, 1998, p. 1.
58. Ibid.
59. Ibid.
60. Year 2000 Computing Crisis; Potential For Widespread Disruption Calls For Strong Leadership And Partnerships, United States General Accounting Office Report To Congressional Requesters, April 1998, Page 7.
61. Ibid.
62. Matt Rosoff, "8 Myths About The millennium Bug," c/net, www.cnet.com/Content/Features/Dlife/Millbug/index.html, Sept. 10, 1997, p. 3.
63. Jim Wolf, "CIA: Year 2000 To Hit Basic Services," MSNBC, msnbc.com/news/163517.asp, 1998, p. 2.
64. Ibid.

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