The Year 2000 Problem
by Reynolds Griffith

Discussed in computing circles for many years, "The Year 2000 Problem" awareness has started to creep into other areas as well. What is it and where did it come from? In the early days of computing, memory and disk space were scarce and expensive. Thus, programmers got in the habit of using only two digits to represent the year in dates. The computer then automatically assumed the first two digits of the date to be 19. Thus, 71 would be treated as 1971. That's fine until we get to years beyond 1999. Enter 01 in older programs and it may assume you mean 1901 instead of 2001. This could play havoc with all sorts of computations, especially those involving future money payments.


There are two major effects of this for us to be interested in. The first is simply the cost of correcting the problem. Large companies may have millions of lines of code in their applications, much of it not well documented. It may cost as much as $100 million for such a company to have each line examined and necessary corrections made. Estimates of the total cost are up in the 100s of billions of dollars. This could be a drag on the real economy, though it may not show up as such in the published numbers, (The cost would be included in Gross Domestic Product even though there's no positive economic benefit.)

The second effect is what happens when not all companies and agencies get their systems corrected. Not all will. It's not merely a matter of cost, but of the number of manhours of programmer time that will be required. There may simply not be enough time for companies who have not already started dealing with the problem to get it corrected. Some, of course, already have. Mortgage lenders and other lenders whose notes extend beyond a few years have already had to prepare amortization schedules going past the year 2000. Even companies which are relying on relatively recent miniand desktop computers and software may have trouble with their operations. They may also be affected if their customers and suppliers are not year 2000 compliant. There is potential for major economic dislocations.

Another interesting aspect is the effect on government agencies. The Social Security Administration claims that it started working on the problem years ago and will have it taken care of by 1998. Other agencies appear not to have been so alert. Particularly intriguing is the Internal Revenue Service. Shelley Davis, the former official IRS historian, writes "Without decisive congressional action there may only be a few years before we face an IRS meltdown. The looming 'Year 2000' software conversion issue brings a chill to those who realize its seriousness. The same Arthur Gross who admitted the intellectual lapses of the IRS said last fall that a failure to complete this conversion 'would mean a major disabling of the IRS.'" In a recent letter Dick Armey says that the IRS has admitted that after spending $4 billion on modernizing its computer system, the new system doesn't work. His solution is to replace the present tax code with a simple flat tax. This may be the only "decisive congressional action" that would have a chance of solving the problem, since merely throwing more money at it obviously won't.

What to do

PCs bought in recent years may handle the changeover without any trouble. You can check your own computer to see if it will handle it. (Remember to back up your hard drive before any testing just to be safe.) Go to the DOS prompt and type date. At new date, enter 12-31-99. Then type time and at new time enter 11:59p. Wait a little over a minute and type date again. It should tell you that the date is Saturday 1-1-2000. While you have the date changed, go to any application software that includes a date function and try it out. (I was pleased to find that my old WordStar word processor that I still use the most could still put in year 2000 dates automatically.) After letting the date roll over from 12/31/1999 to 1/1/2000 or after entering a 2000 or later date in the date function, turn your computer off and back on. Then check the date. When I did this on my computer - whoops! It reverted to 1980. A bit concerned, I explored the consequences. In my case, nothing serious - I would have to enter the correct date each time I restart the computer. However, if you have programs that automatically load when the computer starts, you could have trouble. One of them could pick up the wrong date and do strange things, like deleting files or messages that it works with. Don't forget to go back to the DOS prompt and change the date and time back to the current date and time.

Gary North suggests as a cautionary step making sure that you have hard copies of any records or documents (birth certificates, transcripts, pension records, etc.) that may be stored on mainframe computers. Also, seeing if your property insurance company or agency is prepared to issue policies expiring past 2000.

An Internet poster reported already running into the problem of having a credit card rejected be-cause it expired in 00. All three of our credit cards expired in April and May, so I waited with interest the renewal cards. Two of them were renewed for two years, the third for two-and-a-half, instead of the usual three years. The Mastercard association has advised banks not to issue cards expiring after 1999. One major issuer recalled a batch of cards after issuing them with 00 expirations. [As of Fall, 1997, the credit card associations have advised that enough terminals are compliant for banks to again issue cards with a 00 exiration.]


If credit cards were the extent of the problem, we'd have little to be concerned about. However, there are lots of other systems which may be affected. Here are some scenarios for the Year 2000 problem which I adapted from a posting in the Computer Risks Digest.

Speed Bump: (mostly omitted - things slow down and we go over the bump without real damage.) Slow Drag: In this scenario, problems appear over time before and after the year 2000. As daily, weekly, monthly, and other periodically run programs encounter the problem, there is a constant drag on economic activities. Billions of dollars are spent correcting the problems. Everything done in 1999 that carries over to 2000 or done for the first time after 2000 will be problematic. Delays, errors, and decreased productivity diffuse through the economy. Lawsuits proliferate, further dragging the economy down. The effect is as significant as a major increase in tax rates or energy prices. The year 2000 problem results in a recession.

Severe Drag: In this scenario, as in the previous one, problems appear over time before and after the year 2000. Billions of dollars are spent correcting the problems, but some firms don't get them corrected and fail. Many programs run in 1999 which have results that carry over to 2000 produce errors. Some also don't work right when run for the first time in 2000. The delays, errors and decreased productivity cascade through the economy. Lawsuits clog the courts, further dragging the economy down. Financial markets react. Stocks go into a substantial bear market and interest rates rise. The year 2000 problem results in a depression.

Optimistic disaster: In this scenario many transportation company and bank systems aren't fixed in time. The problems threaten physical harm to the public as well as collapse of the economy. Before events can escalate the government intervenes. A bank holiday is declared. Government mobilized troops or bureaucrats take over food shipments and other essential activities. Normal commerce ceases, but hastily constructed emergency systems provide society with basic needs. FEMA convenes emergency councils to direct local areas. While it is a physical disaster like a hurricane or flood, everyone understands what is needed and cooperates to reconstruct and begin anew.

Pessimistic disaster: In this scenario, too, many transportation company and bank computer systems fail. In addition, some telephone and federal government systems, including the IRS, can't function. The public panics, besieging government offices. Bank runs develop and many banks fail. Financial markets collapse. Large cities erupt in rioting and looting. Some local governments continue to function, but many government units and businesses can't. A new dark age lasts for several years.

We'll need to keep an eye on this issue to better determine its effects and how to cope with it. We'll keep doing this in future newsletters.

vers1.1 10/97

Adapted from "Coping with Turbulent Times" newsletter, Winter, 1997 and Spring, 1997.
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