Y2K - the Millennium Bug


What'll you do for a living in the year 2001?

Let's look at the proposed, or is it "threatened" consumption tax, called the GST. You'll see that we're at the end of the world system. That in order to save yourself you must recognize YOUR day and ITS Message. And get away from the city and the east coast of Australia, before the Millennium Bug begins to impact.

Unless you're a fix-it man living in a small town, you won't be doing what you do today. If you make your living in financial services, you'll surely be doing something else. If you're a journalist, you'll be in a new profession. But what? What other useful service can you provide? You have very little time to make the switch. Let me show you why.

We live in a world that depends on a high division of labor. That world has less than two years to go. In one gigantic collapse, the division of labor will implode. This implosion will begin in 1999. It'll accelerate in 2000 and thereafter. Those who work in highly specialized fields will find little or no demand for their skills, in face of an enormous supply of desperate, low-wage competition. Any job that didn't exist in 1945 probably won't have much demand in 2001, with one exception: computer software programming.

The June 2 issue of Newsweek ran a cover story on the looming computer crisis of the Year 2000, called y2k. (Shorthand for year two thousand). In the week the article appeared (late May), the Dow Jones Industrial Average set a record new high. (It was beaten a week later.) If investors believed the information reported in the Newsweek article, the world's stock markets would have collapsed. Clearly, people do not believe it. That's why a small handful of people can get out now - out of the stock market, the bond market, and any city over 25,000.

Not everyone can get out at the top of a bull market. This includes the "bull market" known as modern industrial society. Pull the plug on the local power utility for 30 days, and every city on earth becomes unlivable. What if the plug gets pulled for five years?

How do you rebuild the shattered economy if the computers go down, taking public utilities with them? Without electricity, you can't run the computers. Without computers, you can't fix computers. How can you assemble teams of programmers to fix the mess? More to the point, how do you pay them if the banks are empty? Chase Manhattan Bank has 200 million lines of computer code to check, then repair. Citicorp has 400 million lines. All big banks are similarly afflicted. And even if this could be fixed, bank by bank, there's no universal repair standard. Thus, the computers, even if fixed, and that's doubtful, will not work together after the individual repairs. A noncompliant bank's data will then make every compliant bank noncompliant. Thus, the world banking system will crash in 2000. When the public figures this out in 1999, the bank runs will begin. You probably won't have your present job in 2001.

"It Just Can't Be True!"

You don't believe me, of course. Not yet. But I've broadcast the evidence. You can verify what I'm saying. But you still won't believe it. Why not? Because it's too painful. In their book, The Sovereign Individual, Davidson and Rees-Mogg make a very important observation: A recent psychological study disguised as a public opinion poll showed that members of individual occupational groups were almost uniformly unwilling to accept any conclusion that implied a loss of income for them, no matter how airtight the logic supporting it. Given increased specialization, most of the interpretive information about most specialized occupational groups is designed to cater to the interests of the groups themselves. They have little interest in views that might be impolite, unprofitable, or politically incorrect (p. 339).

My views are all three: impolite, unprofitable, and politically incorrect. Impolite, because I'm saying this: (1) those advising you are as blind as an eighth-century Israelite king; (2) they've given you information that will prove to be wildly unprofitable; (3) all the hype about you getting rich and the world getting rich is utter clap-trap. We're heading for a disaster greater than anything the world has experienced since the bubonic plague of the mid-14th century.

Because the year 2000 begins on a Saturday, millions of victims won't be aware of their dilemma until the following Monday or Tuesday. They'll pay no attention to advance warnings, such as this one, that they're at risk.

As you listen to this report, just ask yourself: "How will this affect me? Is my business at risk? Is my income at risk?"

Let's consider the Origin of the Year 2000 Problem.

Over thirty years ago, programmers who wrote mainframe computer software, saved what was, in those days, very valuable disk space, by designating year codes in two-digits. 1967 became 67, 1978, 78, and so-on. Back then, saving this seemingly minuscule amount of disk space seemed like an economically wise decision. It may prove the most expensive forecasting error since Noah's flood.

What the programmers ignored for three decades is this: in the year 2000, the two digits will be 00. The computer will sit there, looking for a year. At midnight, January 1, 2000, every mainframe computer using unrevised software dies. Old acquaintances in the computer that New Year, will indeed "be forgot".

Programmers who recognized the implications of this change didn't care. They assumed their software would be updated by year 2000. That assumption now threatens every piece of custom software sitting on every mainframe computer - unless the owner of the computer has had the code rewritten. In some cases, this involves coordinating half a billion lines of code. (For example: AT&T). One error on one line can shut down the whole system, the way that America Online was shut down for a day in 1996 because of a one-digit error.

The handful of reporters who've investigated this problem have met a wall of indifference. "We're all using microcomputers now." "This is a problem only for the companies still using mainframes." "Cheap solutions will appear as soon as there's a demand." "The software will be updated soon, and I'll buy it then." "If this were a serious problem, we'd have heard about it." Yet this last response was given to someone - a reporter, who's trying to tell people about the problem.

I first read about this problem years ago in a book by Robert X. Cringely: "Accidental Empires." It's not as though the computer industry has been unaware of it. Only a few weeks ago, I read a column on computers in which the writer said that his editor is tired of him mentioning it. This is typical. The general public doesn't know about it, but editors are already tired of hearing about it. "It's old news." Well, it's new news for most people.

What does it matter, really? We use microcomputers. Microsoft has solved the Year 2000 problem, we assume. Everyone uses desktop computers or, minicomputers, right? Wrong.

Governments rely on aging mainframes and software

On September 24, 1996, Congressman Stephen Horn, Chairman of the Subcommittee on Government Management, Information and Technology, submitted to the full committee a report on the Year 2000 problem. The Subcommittee held hearings on April 16. (Just one day of hearings. This indicates the degree of government concern). He said that these hearings revealed "a serious lack of awareness of the problem on the part of a great number of people in business and government. Even more alarming was the cost estimate reported to the Subcommittee to remedy the problem, which was said to be $30 billion for the Federal Government alone." Then he announced: "Without greater urgency, those agencies risk being unable to provide services or perform functions they're charged to perform. Senior agency management officials must take aggressive action if these problems are to be avoided."

Yet despite Horn's valid warning, nothing visible is happening. He knows this. These agencies must shift hundreds of millions of dollars from their existing budgets to hire outside programmers to rewrite the code that runs these agencies. This isn't being done. More to the point, the longer they delay, the worse the problem gets. You can't just go out and hire programmers who are familiar with the code. As businesses find out what threatens them, the demand for these highly specialized services will soar. (If businessmen don't figure this out in time, payment will come due in January, 2000).

The Subcommittee's report warns: "This issue may cause banks, securities firms and insurance companies to ascertain whether the companies they finance or insure are year 2000 compliant before making investment decisions."

It also says companies will start demanding contractual warranties guaranteeing against Year 2000 breakdowns.

A memorandum from the Library of Congress Research Service (CRS) has warned that "it may be too late to correct all of the nation's systems." So, the question arises: Which systems will survive and which ones won't?

Here are some problem areas, according to CRS: Miscalculation by the Social Security Administration of the ages of citizens, causing payments to be sent to people who are not eligible for benefits, while ending or not beginning payments to those who are eligible; Miscalculation by the Tax Office of standard deductions on income tax returns for persons over age 65, causing incorrect records of revenues, and payments due; Malfunctioning of certain Defense Department weapon systems; Erroneous flight schedules generated by the Federal Aviation Administration's air traffic controllers; State and local computer systems becoming corrupted with false records, causing errors in income and property tax records, payroll, retirement systems, motor vehicle registrations, utilities and a breakdown of some public transportation systems.

These aren't small issues. They'll probably start receiving media attention when it's so late in the process there'll be massive foul-ups in coordinating the revisions.

Notice, the biggest one is missing: an international bank run, as depositors demand cash. From that day on, all exchanges will be local: it will be the collapse of the division of labor.

I realize there's been tremendous progress in microcomputer power, but does anyone really think that all Federal government forms can be put on three dozen Compaq desktop computers, and run with, say, Lotus Approach or Microsoft Access? Even if they could, how would you re-train all the bureaucrats to use the new systems? How fast will they learn? How fast do bureaucracies adapt?

The US Congress Subcommittee's report warns: "The clock's ticking and most Federal agencies haven't assessed their major systems to detect where the problem lies in each Federal department, office and division. The date for completion of this project can't slip."

By "cannot," the Subcommittee's report-writer meant "must not." The date surely "can" be allowed to slip. It almost certainly will be allowed to slip.

Additionally, the task may be more difficult for the public sector where systems have been in use for decades. Software documentation may be missing, and therefore increase the time it takes from the inventory phase to solution.

Did you get that? The software documentation's gone! And remember, we're not just talking about the United States government. We're talking about every government - national, state, local - anywhere on earth, with its data stored on an unrevised mainframe computer system, or which relies on a third-party computer service using uncorrected software.

As the year 2000 approaches, word will slowly begin to spread: "After the three-day weekend inaugurates the year 2000, there's going to be a hangover like we've never seen before." For some, it will be a time of celebration. For others, it'll be the end of their dreams. It depends on whether they're being squeezed by the government or dependent on it.

It's not just government that's at risk. It's private industry.

Kiss Medicare goodbye. Some 38 million people received US Medicare payments in 1997. In 2000, an estimated one billion claims will be filed, valued at over $288 billion according "Medicare Transaction System", the May 16, 1997 report of the General Accounting Office (GAO).

The Medicare system won't make it through 2000. The report shows why. Medicare claims aren't actually administered by Medicare but by 70 private agencies. These agencies have been informed that their contracts will not be renewed in 2000.

The agency that officially supervises Medicare has plans for one huge computer system that'll bring the program in-house. It's the same dream that motivated the Internal Revenue Service for the past 11 years. The IRS announced earlier this year that after 11 years and $4 billion, the attempt had failed.

Medicare now knows it has a problem with its computers. They're not Year 2000-compliant. So, to make sure they'll be compliant, Medicare has issued an appeal to the 70 newly sacked companies: "please fix the year 2000 problem for us before you leave". As the GAO report puts it, "contractors may not have a particularly high incentive to properly make these conversions..."

What if the system fails? (What if? Are they kidding? When!)

The report says the Health Care Financing Administration (HCFA), which is responsible for running Medicare, hasn't made contingency plans. "HCFA officials are relying on the contractors to identify and complete the necessary work in time to avoid problems. Yet the ... contractors not only haven't developed contingency plans, they've said that they do not intend to do so because they believe this is the HCFA's responsibility."

You can kiss the IRS goodbye. The IRS has 100 million lines of code. Their code is not year 2000-compliant. After the failure of the 11-year project to upgrade the system, Chief Information Officer Arthur Gross announced that getting the IRS year 2000-compliant is the "highest priority for the IRS." The IRS has nearly 50,000 code applications to coordinate and correct. This task will require them to move 300 full-time computer programmers to the new project. (Reported in "TechWeb," April 21, 1997).

For purposes of comparison, consider the fact that the Social Security Administration began working on its year 2000 repair in 1991. Social Security has 30 million lines of code. By June, 1996, the SSA's 400 programmers had fixed 6 million lines.

What if the IRS isn't technically equipped to pursue tax evaders after December 31, 1999? What if the IRS computer system isn't fully integrated with all of its branch offices? What if the system's massive quantities of forms are not stored in a computer system that is Year 2000-compliant? More to the point, what if 20% of America's taxpayers believe that the IRS can't get them if they fail to file a return?

In 1999, the IRS may find a drop in compliance from self-employed people. If the IRS can't prosecute these people after 1999, there will be a defection of compliance by the self-employed. When word spreads to the general public, there'll be a hue and cry. At first against the evaders, but then against employers who are sending in employees' deductions when self-employed people are escaping. Meanwhile, cash-only, self-employed businesses will begin to lure business away from tax-compliant businesses by offering big discounts.

This will start happening all over the world. Once it begins, it won't be easily reversed. The tax system rests on this fear: (1) the government will pay us what it owes us; (2) the government can get us if we stop paying. Both aspects of this fear'll be called into question in the year 2000 if the governments' computers are not compliant. Big Brother is no more powerful than his software. On January 1, 2000, this strength may fall to zero. Actually, double zero.

If the IRS can't collect taxes, and if all the other mainframe computer-dependent tax collection agencies on earth don't fix this, what'll happen to the government debt markets worldwide? To interest rates? To the government-guaranteed mortgage market? Kiss them all goodbye.

Australia's FOREIGN-controlled political Party systems are pushing for a GST. Why? Because as unemployment continues to grow, income and company tax revenue will decrease. Besides, their mainframe computer system may not be able to collect income taxes. This is why I believe they're trying to place the onus of tax collection on private commercial enterprise with their microcomputers through imposing a GST that favors big business and the wealthy. radio109.htm

Further studies on the Y2K Millennium Bug computer problem:
The Y2K Crisis: A Global Ticking Time Bomb?
The Year 2000: Social Chaos or Social Transformation?
The Millennium Bug
www.yourdon.com
www.garynorth.com

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e-mail to: ags@biblebelievers.org.au