Y2K in Perspective

My family thought that I was an alarmist during the months that led up the century change. I had been involved in several Year 2000 projects and had done public speaking at conferences dedicated to the subject. I was an alarmist because I suggested to relatives and friends that they take stock of the situation, store some food and pull their money out of the stock market- at least for a few months.
There were two aspects of the year 2000 problem: programming deficiencies and disastrous secondary effects. In 1998, it didn’t look like the programming deficiencies would be fixed in time. But in the end, they were—to everyone’s amazement. So I had good reason to be concerned in 1998 but as the new century rolled in, I was proved wrong overall. The various teams of programmers pulled it together and we slipped into 2000 unscathed.
The second aspect of the year 2000 problem still vexes me. The potential secondary effects were enormous. The problem wasn’t a programming glitch that could be fixed—it was a world that had become convoluted beyond all imagination. The Y2K scare was that our overly-interdependent world would unravel if a few key functions failed.
A decade later, I’m still an alarmist. Thinking of the prospect of the post petroleum wind-down and the disturbing weather that threatens our agricultural base, I want to scream, “beware!” Particularly alarming is the fragility of America’s agriculture system. It goes beyond the “3000-mile Caesar salad”. As a society, we are several degrees removed from the production of the food we eat. In 1999, the US census showed that a mere 1.7% of the US workforce works on farms. Compare that to the last great financial collapse, in 1930, where 21% of the workforce was on the farm. We weathered the first few years of the Great Depression largely by feeding ourselves from the nation's gardens and small farms. If it happens in 2008 ... we'd starve.

For those who are reluctant to move their savings from stocks to “cash”, take heart. If you had pulled out on July 1 1999 and reinvested on July3 2000, the S&P 500 would have moved up a mere 6% (Of course it was on a downward slide through mid-2002.). In retrospect, given what we knew, it was prudent to face the risk directly and take precautions. Unfortunately, our soft landing in 2000 has made it easy for many to slough off the storm clouds that are gathering in 2008.