Y2K, according to those who still adhere to the "flat world" theory, is about to
destroy the world as we know it. Well, I’m sorry, but count me as a non-believer.
I’m not about to build a bunker in Arkansas, nor am I going to cash in all my stocks
and buy gold and toilet paper for barter.
According to Utah Senator Robert Bennett’s recently released special committee report
on Y2K, "In this country, we will have a bump in the road but it will not be
crippling." Recent reports by the Federal Government showed that a majority
of government agencies are now Y2K compliant, with the remaining expected to meet
deadlines later this year.
Financial services, utilities, communications, and transportation all get high marks in
his report. Federal Chairman Alan Greenspan also testified that the banking sector is in
good shapealong with stock exchanges where a number of successful tests have been run.
The Y2K phenomenon has and will continue to impact our economy for some time. Some of the
impact will be positive, and some will be negative. Let’s get the bad out of the way
first.
Foreign countries will suffer more than the U.S. Not all developing nations have the
resources to fix the problems as quickly as we do. This could have some negative impact on
foreign trade as they struggle to catch up. But it also represents opportunities to our
technology sector for future sales of equipment, software and expertise.
Money and emotional energy will continue to drain off to the fear mongers who are
profiting by selling books predicting the dire consequences we face when all the lights go
out at 12:01 the morning of the first day of the new millennium. Imagine, no ATMs, no
credit card transactions, and no place to land the airplanes in the air around the world.
No, I don’t think so.
We are beginning to hear of scams being perpetrated by unscrupulous individuals who are
attempting to extract bank and credit card information for the unwary, on the pretext that
they need the information to protect the depositor/credit card holder from potential bank
failures. I suspect this is just the tip of the iceberg for scams. There will be more.
On the plus side, our economy is getting a boost from increased spending on information
technology. The threat of Y2K computer malfunctions is forcing business to upgrade
information systems. Not only is this beneficial from the point of view that new equipment
and software is being produced and sold, but it will result in increases in productivity
for the years ahead.
According to economist Lawrence Kudlow, early 1999 reports suggest that investment in
technology continues to accelerate. He reports that computer and office equipment spending
rose 3% in January while total industrial production was flat. For the past 12 months,
technology production has increased 49.4%, compared to only 1.7% overall.
Kudlow sums up his feelings by calling the Y2K process "a healthy influence on
the economy, yet another example of Schumpeterian creative destruction." I
couldn’t agree more.
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