The Global Food Chain

Alan Simpson

I am very fortunate to have had the opportunity to travel, speak, and work in over 60 countries. This gives the ability to see the "Big Picture", behind the sound-bites and manufactured publicity of the domestic media machine. One realization is that the structure of modern high-tech commerce and industry is very fragile. That the entire global industrial complex is interconnected, and really built on a foundation of shifting sands. This equally applies to the US domestic supply chain. It is far more fragile than most people imagine. True it can take a hit, in one place at a time, and quickly recover. Resources can be switched, and back-up systems activated. But we have never experienced a global problem, on the scale of Year 2000. The "Information Society" is not built on the firm rock of the "Industrial Society", where tangible assets were the norm, factories, machines, iron, steel, bricks and mortar. Today we have information, EDI, the web and electronic transfer of our wealth.

We can give these shifting sands a name, let's call them "Trust".

Why use "Trust" and not something like "Facts" or "Reality".  Well, in the modern world this machine runs on perceived values, not real values. Take for instance one of the many software companies, the new darlings of the New York Stock Exchange. Their actual value, in traditional tangible assets, is usually very small. But their stock trades at forty or so times their annual earnings. Notice annual earnings, not real value. Still their market capitalization is huge. Compare to millions of fields of wheat, tons of apples, or miles of steel I-beams.

So why do people buy the stock at these grossly inflated figures. They trust the company to operate, trust people to buy their products, and trust the supply chain to be there to supply raw materials, and deliver finished products and services. They trust the bank to be able to deliver cash from their accounts, to their brokers to buy the stock. And they trust the system to operate flawlessly when they want to sell their stock, at the huge profit they have come to expect.

The same goes for the entire length of the supply chain. It is the trust for suppliers below, and customers above that drives the mechanism. The machine shop in Philadelphia, the farmer in Nebraska, the printer in Atlanta, the auto manufacturer in Detroit. They all depend on each other. They all depend on power, communications, transportation and the supply of finished products, and raw materials. They trust the system to work. They have no reason to suspect it will not work.

Year 2000 seems an abstract problem, affecting old mainframe computers, far removed from the complexities of the well oiled global supply and consumption machine. That is what they read in the media. Media and political scrutiny has been on making sure government departments, banks and financial institutions can manipulate dates correctly. If A was born in 1945, how old will he be in 1999, and 2000. In other words, how much taxes should A pay, and when will A start being a statistical liability on society.

The problems of Wall Street have gained all the publicity, in their news media, owned and controlled by Big Business. The government committees have analyzed performance in their government departments, and mega-corporations have poured money into rectifying their IT divisions. They are the top of the "food chain". Their moans have been heard loud and clear. Volumes of information have been written on their problems. Articles by the hundred in the trade, and popular press.

But someone has missed something.

Something very important.

Without the rest of the  "food chain" to support them, these Goliath's of industry, and finance will collapse. The "Domino Theory" of the Vietnam war will be reborn, in a new guise.   They will become the debris at the bottom of the new food chain. The debris that the "bottom feeders" consume as food. (The jokes about lawyers, and bottom feeding fish, immediately come to mind.) But today these risks seem too far removed to be realistic.

This critical global "food chain" makes interesting research material. For the past three and a half years I have been exploring it, from top to bottom, and three-dimensionally around the world. It is not research into computers, not Cobol, Fortran, Assembler or any other of the 2500 languages on record. It is about people, and how they run industry, government, and commerce.

People make up the "food chain".

They work, they think, they eat, drink, drive, communicate and play.  They produce goods and services, and buy goods and services. They also vote and buy stocks.

But, I hear Wall Street shriek, "people are for downsizing, for replacing with automation." People are marvelous things to the corridors of power. They pay taxes, they work, and when no longer needed they go away and start their own businesses, thus creating an even stronger and vibrant "food chain". This in turn brings in more taxes, and creates more wealth. This allows for companies on Wall Street to sell stock for even more times their annual earnings. Isn't life grand! It's a wealth creating merry-go-round with no end!

Life is great. Well, if you are well enough up the "food chain", it is really great. Up there they are living life to the full, mortgaged to the hilt. All the credit in the world. But look at the examples of what is perceived as success, as we end the current Millennium.

Our ancestors would not comprehend. You have this great idea, it's all in Cyberspace, on the Web, and you give it away for free. You haven't a clue how you are going to make a profit, or when, and you aren't really sure if you can pay back investors. But nobody cares, they will give you the money anyway, hundreds of millions of dollars.  The fact that the money was the savings, and earnings of tens of thousands of hard working entrepreneurs, is not a factor. At the top of the "food chain" people have ceased to matter. Concepts and issues matter. The surplus of investment dollars has to go somewhere. Let's find a "cool", "neat" stock, and pump it up! Hey, a million dollar bonus, doesn't care which stock it was earned from.

Lower down the "food chain" it is usually a "hand to mouth" existence. But don't worry, even the big boys have adopted this strategy. It's called "just in time." You keep just enough to feed the process, and rely on a well-oiled, efficient, transportation system, running on cheap fuel, to deliver everything, "just in time". Instead of buying stocks of goods and products, you buy stocks of companies. You pass on the responsibility of feeding your enterprise to someone else, further down the "food chain". Great strategy.

So let's concentrate on the good life, and focus all our Year 2000 effort on those at the top of the supply chain. Let's estimate that 10% of the lower echelons will go belly up and drop out. It's a big fat pyramid, 10% or so can easily be lost.

But what happens if these 10% or so, small and medium businesses, do not roll over and die quietly, as the pundits reckon. What happens if the others don't immediately take up the slack and produce at full capacity, to satisfy the needs of the mega-corporations. What happens if the entire supply chain slows down, even grinds to a halt for a period of time.

Well then the top echelons will be starved of essential supplies. They too will grind to a halt, waiting for their "just in time" raw material and component parts. When they can produce, their output will pile, up as their customers will cut back on consumption. Money supply will be strained. On Wall Street, the million dollar bonuses, paying for million dollar homes in New York, will suddenly stop.  The demand for speculative investments will evaporate.

The entrepreneurs in the supply chain will cash in their 401K stocks to pay for essentials. In the critical survival mode, stock in a speculative software company is superfluous. That "cool" idea now looks "crazy". Didn't someone once create a pyramid of needs? Survival needs bring us all back to reality, very quickly. May not happen. Bet it will!

So you think we are paying special attention to the 20,000,000 small and medium enterprises that make up this "food chain" in the United States, as well as monitoring and helping the hundreds of millions, maybe billions, in the rest of the world. Manufacturing companies, mines, oilfields and farms that supply us every thing from fuel to minerals, from drugs to food.

Sorry, you lost! We are totally ignoring them.

We are concentrating on the big banks, investment resources, tax collecting, and government spending entities. We have hearings to determine when the Department of Silly Walks, will become compliant. Will it be 2017 or 2019. Monty Python would have been proud. If Department of State is not compliant by 2000, will anybody notice?

Oh, about voting and buying stocks and shares. What the politicians have not worked out yet is that these 20,000,000 small businesses will be voting later in 2000. The wrath of the voters will turn against the politicians, who did nothing to protect their charges. And the bankers? What the bankers are only just becoming aware of, is that the doomsayer pundits are advising everyone to demand cash, or Gold for 2000. With less than 2%, or so, convertible reserves that could be a serious problem. It will not take too much to start a panic, considering the volatility of the global financial markets. If Joe Public starts unloading paper money, and paper stocks, it could bring a whole new meaning to "Junk Bonds" .... when that refers to the Fortune 100 in 2001.

I get very weary listening to the doomsayers preaching "the sky is falling, the sky is falling, it's too late to do anything, too late to fix the problem."

.....Failure is Not an Option

It will be too late at one minute past midnight, on January 1st, 2000, and even then there may still be some leeway for some systems. There are still manual reversion means for some functions. It is possible still to write a check, or type an invoice manually, despite what the Accounts Department may tell you. A living nightmare for Social Security, but still within the realms of possibility. The better alternative is to fix the problem, before the costs skyrocket, and time runs out.

The financial experts warn that medium businesses can't possibly afford $1.25 a line to rectify code. Well surprise, most medium businesses don't write huge date-hungry programs, like the financial industry. They haven't changed their mind every week, like their big brothers in Wall Street, and rewritten their programs, to reflect "flavor of the week". They haven't had the spare cash to afford that luxury.

They also have invested in the latest cost-effective technology. Usually they do not rely on expensive mainframes, located in the most expensive Real Estate on the planet. It is like the great steam engines that powered the industrial revolution, being compared to the electric motors, that replaced them, in the smaller, more efficient factories.

So compare these predictions of it being "too late", with the requirement of a steam engine owner, having to replace a boiler, against an electric motor having to have it's switch replaced. It's a matter of scale, age and technology.

The sky is not falling! Consider it as a wind approaching. It could be a hurricane, it could be a tornado, or for some, it could be a gentle breeze. My own feelings is that it will be like a Florida Hurricane. There will be some damage, some who built inferior structures will face significant damage. Others will be prepared, and just be inconvenienced. The Federal Government will probably arrive, with too little, too late. The politicians will tour the disaster zone, with an entourage of PR Hacks, and news crews. The insurance companies will try and squirm out of paying claims, and deny liability, and life will continue.

Regardless of potential damage, we must ensure that the 20,000,000 small and medium businesses are warned of the imminent danger of Y2K, and of the precautions needed to protect their businesses. Just as in a natural disaster the political leaders at Federal, State and local level need to become involved, but this time before the event. Leadership is the key!

So it is time to create awareness, but carefully, without precipitating panic. It's time to take the spotlight off the rich and famous, and look at the essential supply chain, for without their support the mighty will collapse. It's time for leadership, from all levels of government. It's time to strive for compliant systems, no matter how late it may seem. It's time to develop contingency plans, to keep industry and commerce running, in the event of the worst-case scenarios being realized. It is time to protect the "Global Food Chain"

Above all:  Failure is Not an Option

Again, and you can quote me: Failure is Not an Option!!!!

(c) 1998 Alan Simpson. All Rights Reserved

(This paper was chosen by the US Government and featured on their IT Policy site on GSA.gov)