On This Day Pre-Y2K

Confused by any of the jargon you see below? Check the Y2K Glossary!

January 1, 2000 Permalink

Here is what we know about y2k. (1) The deadline is fixed. (2) There is no silver bullet. The experts have known this for five years or more. In 1998, the silver bullet stories ended. That’s when I knew that a touch of reality had caught up with the reporters.

There is a familiar slogan: “Nobody knows what will happen in 2000.” In the sense that you don’t know what will be happening in your neighborhood in late January, 2000, this is true. But do you have an educated guess about what life will be like in your neighborhood in June of 2000 if the power grid goes down in January and does not come back up? Yes, you do. So, you don’t think about it. Or you base your stand-pat optimism on this thin thread: “The experts don’t know if the grid will shut down permanently.”

The experts won’t say in public. Some of them may know.

Food Reserves

Here is what we know for sure: there are not enough food reserves to sustain the world if we miss one season of planting. If anything happens to the supply lines for food, there will be a famine. Here is what could go wrong:

1. The means of payment (banking) fails.

2. The fuel supply stops due to a failure of oil extraction, shipping, refining, and the delivery of final products.

3. The hybrid seed producers go bankrupt, and farmers cannot get good crops in 2001 by replanting seeds of this year’s hybrids: 98% of all commercial seeds.

4. The trains stop running.

5. The government takes over farming and food distribution in an emergency.

6. The power grid goes down.

Here are other things we know:

Just-in-Time Production

Just-in-time production is to manufacturing what hybrid seeds are for farming. It is productive if all systems are “go,” and deadly if even one supply line fails. It is a system of dominoes that go in all directions.

General Motors has 100,000 suppliers. As long as there is a substitute source for every item, competition keeps things cheap. But if the supply ceases for a part, the entire assembly line must be shut down. This will eventually bankrupt GM and most of its suppliers. The dominoes will fall. For the whole system to survive, every part must survive.

A chain is no stronger than its weakest link. Almost every link is computerized in the modern chain of production. Y2K will produce a simultaneous crisis.

This is what the optimists simply will not face: the simultaneity and universality of y2k make it a unique event unparalleled in the history of man, with one exception: the tower of Babel.

We live in an information society. In 2000, much of that information will turn into noise. (Adam Smith, meet Claude Shannon.) In 2000, the Alzheimer’s economy will become our greatest threat. The economy, like some dazed Alzheimer’s patient without third-party care, will simply not make it. You don’t lose 75% of your memory and make it. Institutionally, our memories are digital. We do not have enough time or reserves to move back to analog methods of data storage, retrieval, and implementation.

“We’ll run it manually.” Sure they will. For about two or three days, in emergency mode. Maybe. (The words “Chinese fire drill” come to mind.)

1965 Is Gone (Althogh 1900 Could Return)

We can’t move the world back 35 years in one day at zero price. Try to run any profit-seeking organization with the efficiency of 1965, and that institution will be bankrupt in a few weeks, especially if it’s a bank. Cut back airline traffic or any other mature industry to 1965’s level, and the industry goes bankrupt. So do the banks that lend it the money.

I challenge you: name any industry that will be able to be run profitably in 2000 on the basis of 1965 production, distribution, and communications. The world’s second oldest profession -- yes. (In a social breakdown, this industry always sees a boom.)

Adam Smith wrote, “The division of labor is limited by the extent of the market.” When the market implodes in 2000, so will the division of labor. Specialties will find no employers. I can imagine ten million men carrying signs: “Will push papers for food.”

The layoffs in 2000 and 2001 will dwarf those of the Great Depression. But there are no family farms to go home to this time. This time, the Waltons operate computerized stores.

No Large Organization Is Compliant

There is no example of any successful transition to fully tested, independently verified 2000-compliance by any organization with 10 million lines of code or more. (If there is, let me know about it.) Social Security? Where is the independent verification? Who did the final testing for the six months or more that are necessary? They began the code repair in 1991. They have not begun final testing of all systems yet.

We are told that it takes two years or three years to bring a company to compliance. Nonsense. There are no examples of large mainframe systems that have been brought to full compliance other than those that tossed out the old mainframe system and substituted SAP software or some other compliant system -- a conversion process that takes years.

There is no compliant power generating company. Need I say more?

I will: there is no compliant bank, including central bank.

Lies Are Temporarily Effective

Those in charge will lie whenever it’s convenient. When the truth is bad, and a lie will delay judgment, most official representatives will lie or remain silent. We live in an age of lies. When people, especially reporters, want to believe a particular lie, the lie will prevail.

In the weeks leading up to the devaluation of the dollar and the closing of the U.S. gold window to foreign central banks, Treasury Secretary John Connally was asked repeatedly if the U.S. was planning to devalue the dollar. He denied it. On August 16, 1971, the day after Nixon unilaterally abolished the gold exchange standard (1922-1971), Connally held a press conference. He was asked why he lied. He replied (approximately): “If I had told the truth, there would have been a run on our gold and a collapse of the dollar. I had to lie.” The reporters went on to another topic.

I was getting rid of dollars and buying foreign goods in the week before the devaluation. I knew Connally was lying. I knew they would devalue.

I am equally confident today that they’re lying about y2k. All of them. And for the same reason: if they told the truth and were believed, the panic would begin early. A lie defers public panic. A lie pays. Nobody’s career gets permanently hurt by lying today. This lesson is not lost on our leaders. Lying is regarded as the responsible thing to do.

Computers Are Literal

They will do what they are told, including cease functioning when given conflicting commands. Their programs determine the limits of their flexibility. They are idiot savants that have been programmed wrong.

They will not hear your cries. They will not feel your pain. They do not care whether you are an optimist or a pessimist. They do not care whether you’re an apocalyptic or in denial. They do not care that things will be hard on you and your family. They do not care how long you worked to get where you are. They do not care that you meant well. If they could speak, they would all repeat Rhett’s parting words to Scarlett.

They do not understand the phrase, “Klaatu barada nicto.”

The Panic Has Not Begun

This gives us a little more time to prepare personally.

Pareto’s 80-20 law teaches that at least 80% of a system’s resources is devoted to maintenance. Innovation -- if any -- comes from the remaining 20%.

Even activists have been unable to escape this law. Their time and money go for maintenance. Meanwhile, the general public is nowhere near this well prepared.

At some point, you will panic. How do I define panic? When you realize that the 80% devoted to maintenance is subsidizing a dead future.

If you ever move beyond 20% invested in y2k preparation, you will have moved into survival mode. For most people, this will occur late in 1999, if at all. For you. . . ?

Leadership Flows to Those Who Take Responsibility

Maybe this one isn’t self-evident, but it’s true. Service is the basis of that type of leadership that builds a good society. Power is temporary.

This is not a call to pacifism. It is a call to the risks associated with sacrifice. You’ve already risked your reputation by warning others about y2k. They will remember. They will also remember the lies that the present leaders have indulged in. They will think back and say, “I’ve been misled.” Those words may even become an acronym.

You have the moral right to defend your property. You also have the moral right to share part of it on your terms. An open hand will go a long way to re-establish trust in a time when trust will be in short supply -- a truly scarce economic resource. Our faith will be tried in the fire that’s coming. The restoration of the division of labor has to come through trust and service, and that begins one-on-one.

Buy an extra sack of pinto beans for your neighbor. Maybe two sacks. You can afford it.

—Gary North, garynorth.com, 01/01/00

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