Inside Risks: Risks of Y2K

As we approach January 1, 2000, it’s time to review what progress is being made and what risks remain. Our conclusion: Considerable uncertainty continues; optimists predict only minor problems; pessimists claim that the effects will be far-reaching.

Most U.S. government agencies and departments claim they have advanced significantly in the past year, with some notable exceptions (see www.house.gov/reform/gmit) and late-breaking worries (such as the Veterans administration). However, some agencies have weakened their definitions of which systems are critical, and government auditors warn that the success rates are based on self-reported data.

The U.S. government has recently been exuding an air of confidence, perhaps in an attempt to stave off panic. However, many states, local governments, and other countries are lagging. International reliance on unprepared nations is a serious cause for concern. Some vendor software has yet to be upgraded. Although many systems may appear to work in isolation, they depend on computer infrastructures (such as routers, telecommunications, and power), which must also be Y2K-proof. The uncertainty that results from the inherent incompleteness of local testing is also a huge factor. Cynics might even suggest that the federal government’s stay-calm message is misleading since there is no uniform definition of compliance, no uniform definition of testing, and little independent validation and verification. And then there are desires for legislating absolution from Y2K liability.

One of the strangest risks is the possibility of widespread panic inspired by people who fear the worst, even if the technology works perfectly. Many people are already stockpiling cash, food supplies, fuel, and even guns. Bulk food companies and firearm manufacturers report record sales. Some government officials fear that accelerated purchases in 1999 and reduced demand in early 2000 could spark a classic inventory recession.

There is also a potential risk of government overreaction. As far back as June 1998, Robert Bennett, the Utah Republican who chairs the U.S. Senate’s Y2K committee, asked what plans the Pentagon has "in the event of a Y2K-induced breakdown of community services that might call for martial law." Y2K fears prompted city officials in Norfolk, Nebraska to divert funds from a new mug-shot system to night-vision scopes, flashlights for assault rifles, gas masks, and riot gear. The Federal Emergency Management Agency and the Canadian government will have joint military-civilian forces on alert by late December. For the first time since the end of the Cold War, a Cabinet task force is devising emergency disaster responses.

There is also a risk of underreaction and underpreparation. Sensibly anticipating something like a bad earthquake or massive hurricane seems prudent. Some people have lived without electricity for prolonged periods of time. (For example, two winters ago Quebec suffered a six-week-long power outage.) Water also is a precious resource. However, fundamental differences exist between Y2K preparedness and hurricane preparedness. The Y2K transition will occur worldwide (and even in space). Hurricanes and tornados are localized, and experience over many years has given us a reasonably accurate picture of the extent of what typically happens. But we have little past experience with Y2K-like transitions.

It is not uncommon for officials to assure the public that things are under control. People look to leaders for reassurance, and this is a natural response. Under normal circumstances, such statements are no more disturbing than any other law or regulation. However, calling out troops and declaring a national emergency are plans that deserve additional scrutiny and public debate. In a worst-case scenario of looting and civil unrest, the involvement of the military in urban areas could extend to martial law, the suspension of due-process rights, and seizures of industrial or personal property. U.S. Defense Department regulations let the military restore "public order when sudden and unexpected civil disturbances, disaster, or calamities seriously endanger life and property and disrupt normal governmental functions."

It might be more reassuring if discussions were happening in public—but some critical meetings happen behind closed doors. Increasingly, legislators are discussing details about Y2K only in classified sessions, and a new law that had overwhelming bipartisan support in Congress bars the public from attending meetings of the White House’s Y2K council. A partial antidote for uncertainty is the usual one: increased openness and objective scrutiny. U.S. Supreme Court Justice Louis Brandeis said it well: "Sunlight is the best disinfectant."

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