RE: Year 2000 Supply/Production Risks

["Halim Dunsky" <halim@y2kcommunity.org>]

It's interesting to try to predict the economics of this. To say that
consumer costs will be affected is to beg the question - up or down?
Supply chain interruption will make goods more difficult to produce.
If production falls moderately, prices will tend to stay flat where
there was originally oversupply, and otherwise will tend to go up. On
the other hand, if disruptions are so severe that many producers fail,
putting many people out of work, the outcome will be a recession or
depression in which prices will go down because demand has gone down,
because people don't have money to spend.

This kind of volatility is one of reasons for the popularity of the
local currency movement, which builds local economic activity that is
buffered from these kinds of global systemic influences. For a good
reference on local currency systems, see economist Bernard Lietaer's
site at http://www.transaction.net/money/.

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Halim Dunsky <mailto:halim@y2kcommunity.org>
Executive Editor, Y2K Community Project <http://www.y2kcommunity.org>

Building Communities for Y2K and a Sustainable Future



> -----Original Message-----
> From: owner-interdoc-y2k@jca.ax.apc.org
> [mailto:owner-interdoc-y2k@jca.ax.apc.org]On Behalf Of Bob Olsen
> Sent: Thursday, January 28, 1999 7:57 AM
> To: y2k@tao.ca
> Subject: [interdoc-y2k 214] Year 2000 Supply/Production Risks
>
>
>
>
>
>   An essay, "I, Pencil" by Leonard E. Read, explains the complexity of
>   late 20th century supply systems and helps us to understand the
>   effect of cascading computer and embedded chip failure that will
>   result from Year 2000 problems.
>
>   Gary North cites this essay under "The #1 Issue: The Collapse of the
>   Division of Labor": http://www.garynorth.com/y2k/detail_.cfm/264
>
>   The URL he links the essay to is
>   http://www.fee.org/about/ipencil.html
>
>   Below are the key paragraphs excerpted from that essay:
>                   ........................
>
>
>
> I, Pencil, simple though I appear to be, merit your wonder and awe
>
>  .... snip .....
>
> My family tree begins with what in fact is a tree, a cedar of straight
> grain that grows in Northern California and Oregon. Now contemplate
> all the saws and trucks and rope and the countless other gear used in
> harvesting and carting the cedar logs to the railroad siding. Think of
> all the persons and the numberless skills that went into their
> fabrication: the mining of ore, the making of steel and its refinement
> into saws, axes, motors; the growing of hemp and bringing it through
> all the stages to heavy and strong rope; the logging camps with their
> beds and mess halls, the cookery and the raising of all the foods.
> Why, untold thousands of persons had a hand in every cup of coffee the
> loggers drink!
>
> The logs are shipped to a mill in San Leandro, California. Can you
> imagine the individuals who make flat cars and rails and railroad
> engines and who construct and install the communication systems
> incidental thereto? These legions are among my antecedents.
>
> Consider the millwork in San Leandro. The cedar logs are cut into
> small, pencil- length slats less than one-fourth of an inch in
> thickness. These are kiln dried and then tinted for the same reason
> women put rouge on their faces. People prefer that I look pretty, not
> a pallid white. The slats are waxed and kiln dried again. How many
> skills went into the making of the tint and the kilns, into supplying
> the heat, the light and power, the belts, motors, and all the other
> things a mill requires? Sweepers in the mill among my ancestors? Yes,
> and included are the men who poured the concrete for the dam of a
> Pacific Gas & Electric Company hydroplant which supplies the mill's
> power!
>
> Don't overlook the ancestors present and distant who have a hand in
> transporting sixty carloads of slats across the nation.
>
> Once in the pencil factory--$4,000,000 in machinery and building, all
> capital accumulated by thrifty and saving parents of mine--each slat
> is given eight grooves by a complex machine, after which another
> machine lays leads in every other slat, applies glue, and places
> another slat atop--a lead sandwich, so to speak. Seven brothers and I
> are mechanically carved from this "wood- clinched'" sandwich.
>
> My "lead'" itself--it contains no lead at all--is complex. The
> graphite is mined in Ceylon. Consider these miners and those who make
> their many tools and the makers of the paper sacks in which the
> graphite is shipped and those who make the string that ties the sacks
> and those who put them aboard ships and those who make the ships. Even
> the lighthouse keepers along the way assisted in my birth--and the
> harbor pilots.
>
> The graphite is mixed with clay from Mississippi in which ammonium
> hydroxide is used in the refining process. Then wetting agents are
> added such as sulfonated tallow--animal fats chemically reacted with
> sulfuric acid. After passing through numerous machines, the mixture
> finally appears as endless extrusions--as from a sausage grinder--cut
> to size, dried, and baked for several hours at 1,850 degrees
> Fahrenheit. To increase their strength and smoothness the leads are
> then treated with a hot mixture which includes candelilla wax from
> Mexico, paraffin wax, and hydrogenated natural fats.
>
> My cedar receives six coats of lacquer. Do you know all the
> ingredients of lacquer? Who would think that the growers of castor
> beans and the refiners of castor oil are a part of it? They are. Why,
> even the processes by which the lacquer is made a beautiful yellow
> involves the skills of more persons than one can enumerate!
>
> Observe the labeling. That's a film formed by applying heat to carbon
> black mixed with resins. How do you make resins and what, pray, is
> carbon black?
>
> My bit of metal--the ferrule--is brass. Think of all the persons who
> mine zinc and copper and those who have the skills to make shiny sheet
> brass from these products of nature. Those black rings on my ferrule
> are black nickel. What is black nickel and how is it applied? The
> complete story of why the center of my ferrule has no black nickel on
> it would take pages to explain.
>
> Then there's my crowning glory, inelegantly referred to in the trade
> as "the plug," the part man uses to erase the errors he makes with me.
> An ingredient called "factice" is what does the erasing. It is a
> rubber-like product made by reacting rape- seed oil from the Dutch
> East Indies with sulfur chloride. Rubber, contrary to the common
> notion, is only for binding purposes. Then, too, there are numerous
> vulcanizing and accelerating agents. The pumice comes from Italy; and
> the pigment which gives "the plug" its color is cadmium sulfide.
>
> ......... end excerpts ......
>
>
>   Now imagine the thousands of computers, the millions of lines of
>   software code and the millions of embedded chips in this long and
>   complex production chain.  Then ask, what is the probability that
>   some or many of those links will fail because of year 2000
>   non-compliance.  Finally, ask, what would be the consequences of
>   individual failures in this production chain.
>
>   My guess is that all supply/production chains are certain to be
>   affected by year 2000 non-compliance failures and that consumer
>   costs will be seriously affected as a result.
>
>
>    .............................................
>    Bob Olsen, Toronto            bobolsen@tao.ca
>    .............................................
>