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from the same article:
2. What I Believe Will Happen
First, a few more generalities. Y2K will converge with and amplify other forces already in motion around the world, namely a global economic deflation and the political dissolution of more nation states. Our nation may not be immune to the latter, though in the unlikely event I wouldn’t expect it to disintegrate the way that the Soviet Union or Yugoslavia did after the collapse of communism. We really do have more of a common culture, however idiotic it may be in its current state, and more fundamentally sound political institutions. A more likely outcome would be disabled federal and state bureaucracies and the consequent increased importance of local government - especially in terms of competence. This leads to another major aspect of Y2K. I believe it will deeply affect the economies-of-scale of virtually all activities in the United States, essentially requiring us to downsize and localize everything from government to retail merchandising to farming. Particulars below.
If nothing else, I expect Y2K to destabilize world petroleum markets. These disruptions will be at least as bad as those produced by the 1973 OPEC oil embargo (so-called). The aftershocks of that event thundered through the American economy for the rest of the decade, giving us several years of interest rates above 15 percent and a weird malaise that puzzled economists called "stagflation (stagnation + inflation). The OPEC embargo involved a lot of backstage political shenanigans, but apart from these, the actual market shortfall appears to have been about five percent of our imported oil. In 1973 less than half of our oil came from foreign producers. Today, more than half does. Of that, at least 30 percent comes from countries that are considered unprepared for Y2K, countries over which we have no control and limited influence.
At every stage of the supply line, oil is vulnerable to disruption. The supply infrastructure of the oil industry is among the most computer and embedded chip dependent of all industries. From the well-heads to the pipelines to the terminals, the port facilities, the tankers, the refineries, and finally to the pumps, the movement of oil is controlled by computer systems of one kind of another. Oil is also the mother of all industries - to borrow a term from our friend in Iraq. Without oil, there are no other industries, in the modern sense of the word. If somewhere between five and 30 percent of our imported oil fails to get here, I think you can be sure that we are in for an economic kick in the ass far more severe than the 1973 OPEC embargo.
Such an oil shortfall would put at hazard such "normal" American activities as national chain retail and industrialized agriculture. I doubt that the WalMarts and K-Marts of the land will survive Y2K. Their fabulous success the past 20 years had been due to the combination of continually falling gas prices, relative world political stability (and long distance outsourcing of cheap labor), and computerization. They operate at extremely narrow profit margins. They will not be able to adapt to even modest changes, and especially fluctuations, in their business equation. In order for WalMart to make a $100 profit, it has to ship 1000 plastic wading pools from California to Pennsylvania - and then sell at least 997 of the wading pools. What happens to their profit margin if the price of truck fuel goes up even modestly - say 30 cents a gallon (which by international standards would be a tiny increase)? What happens to WalMart if their customers’ disposable income decreases by seven percent? What happens if their merchandise supply chain is interrupted by the Y2K problems of their thousand-fold vendors? Or if their own systems produce corrupted data. Or if all the above happens during the same time period? It seems to me that national chain retail is exactly the kind of activity that has achieved an absurd and inadaptable economy of scale, and that they will not be able to function in a post-Y2K world.
And people still believe this buffoon? At Least Gary North had the self-consciousness to stop spouting the exact same doom after being proven utterly wrong. My favorite bit is where JHK, without a hint of introspection or irony, mentions, in 1999 mind you, that he had been preaching the imminent catastrophic collapse of the US way of life for over five years. He's still doing it 12 years on - so for 17 years at the very least we have been about to return, soon, to at best a 1930s economy focused on local consumption, the death of the car-based commute, the end of global trade, yadda yadda. And no, the recent recession does not make him right - there is absolutely no systematic change in the US economy, merely a slowing of its rate of growth, painful for many though it is. I would normally say I don't know who is more foolish - the constant prophet of constantly-wrong doom stories, or the people whose belief in those prophecies remains constant. But then I remember he's getting paid.
And no - thinking prophecies of imminent systemic collapse are stupid, regardless of for how many decades they have been made, does not necessitate a Panglossean belief that all is perfect now, so only an utter moron would try to refute the former valid opinion by attacking the latter strawman.
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