Could capitalism beat the bug?

UNITED NATIONS — The United Nations Y2K coordinators got a lesson in
free-market incentives in handling the millennium bug.

Harris Miller, chief executive officer of the World Information
Technology and Services Alliance, got his international audience’s
attention by explaining that lectures to computer companies about “social responsibility”
won’t get the job done. As for-profit corporations, though, they do have
plenty of reasons to act out of self-interest — first and foremost, the
desire to keep you as a customer in the future. Accordingly, Miller
advised his audience, let them know you will evaluate long-term
relationships on the basis of how they perform in solving your Y2K
problems.

Yesterday’s sessions were under the auspices of the International
Y2K Cooperation Center. In contrast to the
long-winded oratory that predominated at Tuesday’s official sessions,
the tone turned serious, the contents of the sessions practical and
detailed.

Interestingly, the delegates from Asia, Africa, and South America
didn’t seem to have a problem with Miller’s message, but several
European representatives voiced their displeasure over this dismissal of
“social responsibility.” Miller explained shareholder responsibility,
and responded that “it would be irresponsible for any public
company to do work for a client if there’s a probability of not getting
paid, and in the process the company also incurred legal liability for
any Y2K failures. Any company executive who does that will be a
former company executive tomorrow.”

He didn’t say it, but the message was clear: Your computer company is
not the World Bank.

In a three-hour session of sector updates, the Y2K national
coordinators then heard from experts and officials in air transport,
energy, finance, telecommunications, the maritime industry and health.

One sour note was the insistence of some trade groups that they will
continue to keep vital information out of the hands of consumers. Early
sessions were filled with admonitions about the dangers of public
panic. But that same public, it was evident yesterday, is not to be
trusted with information about which air routes will be safe and which
financial systems are endangered. Combine this with the refusal of U.S.
government financial agencies to tell the public which banks are safe,
and the message is clear: Shut up and trust your “leaders.”

Vincent Galotti, of the International Civil Aviation Organization,
detailed the Y2K preparations of his group, the International Air
Transport Association, and the Airports Council International.
WorldNetDaily then cited statements by executives of KLM and other
airlines that they would not be flying all their usual routes as Y2K
approaches, and asked, “Will the public be informed of these decisions?
Do you encourage or discourage such disclosures by airlines?”

Galotti’s response was a complete evasion: “We are encouraging
airlines to fly. They need information to make these decisions, and we
are confident they will have this information.”

But what about the public — will the public have this
information?

Galotti confirmed that information on airport readiness and air route
continuity would be on the restricted portion of his group’s website,
not open to the public.

This caused a Dutch representative to rise in anger: “We need to have
transparency of all information available to you,” he said. “Companies
need this information, too. They need to know which routes will be
open.”

Governments will have this information, Galotti answered, so speak to
your government and ask them to release it.

A similar situation arose when Jim Devlin of CitiCorp briefed the
audience on financial industry preparations for Y2K. The industry’s
Global 2000 Coordinating Group compiles and publishes information on its
website regarding the Y2K readiness of each country’s financial
institutions, and organizes this information into color-coded charts.
But those charts are not available to the public. They, like the air
safety information, are on a “restricted” part of the site.

Bill Mundt of Global 2000 defended that position by stating that
“we’re not trying to be a rating agency, but an information
disseminator. That’s why we restrict the charts to people with a direct
interest in financial services.”

And you thought you had a direct interest in financial services as a
bank depositor and investor!

Devlin did confirm that presently one third of the financial systems
are color-coded amber (“progress needed”), red (“serious progress
needed”), or black (“no material public data is available”). “We think
that’s a cause for concern,” he conceded.

But not for your concern, evidently.

“Contingency planning is nothing new” in the financial industry,
Mundt said. “Major institutions like ours have breakdowns every day.
We don’t like to talk about it, but if you’re one of our customers,
you’re probably aware of this. It’s a way of life.”

“However, the year 2000 is a challenge,” Mundt conceded. “We
do have a situation where we could have things happening many places, at
the same time.”

Speaking on the maritime industry, Rear Adm. George Naccara of the
U.S. Coast Guard said, “the principal concern is undoubtedly the
embedded chips issue.” These microprocessors are the reason container
ships the size of several football fields have a crew of just 12 to 15
people. Naccara informed the audience that the United States gets 95
percent of its imports — including almost half of all oil consumed —
by sea.

“U.S. ports will remain open,” Naccara said, but ships will not be
allowed into our ports unless they have demonstrated their ability to
operate safely.

Millennium parties are another concern of the Coast Guard. “New York
City estimates 30,000 people will be aboard vessels in its harbor that
night,” Naccara said. “Even if these are rudimentary as vessels, they
are technologically dependent. It is therefore especially
important for their operators to ensure that critical systems such as
navigation, main propulsion, steering, fire suppression, and security
have well conceived and well exercised contingency plans ready for the
century rollover.”

Speaking on telecommunications, Ron Balls of the International
Telecommunications Union gave the scenario expected by his group over
the Y2K weekend.

“Around midnight,” he said, “you’ll have a dial tone, but we will see
some congestion, particularly on mobile networks.” Mobile telephone use
has been growing dramatically around the world, he noted, and people
traditionally use them to place calls right at New Year’s Eve.

“One hour later,” Balls said, “we may start to see some computer
failures — if there are computer failures.”

“In 24 hours we’ll have a different kind of traffic peak,” Balls
continued, “particularly with financial houses and the like testing
their systems.” The first day back at work will also see heavy traffic.

“We don’t anticipate a failure of the networks,” Balls said, “but by
the end of the first week there could be some deterioration. Networks
themselves are not so date-sensitive, but their management systems are
at risk, and problems there are slower to show. So it’s deterioration
rather than instant shutdown.”

Like the financial industry speakers, Balls noted that “things do go
wrong every day” in the telecommunications industry. “How do we handle
these problems? We have technical expertise on hand 24 hours every day
of the year.”

Balls, too, had a chart, which he quickly shared with the audience.
It measured the telecommunications risk by global regions, as estimated
today by the International Telecommunications Union (ITU). He stressed
that these were assessments of average risk within each region — some
networks will always be better off than others within each region.