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The Other Y2K Problem

Mises Daily: Thursday, December 16, 1999 by

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While computer experts have frantically tried to update software to avoid the dreaded Y2K glitch, and while others who are convinced the apocalypse is upon us have headed to the hills, we should pause to remember that other Y2K crisis that was supposed to have been upon us. According to former President Jimmy Carter, the world was supposed to end in the next few weeks.

Few among us remember the Carter Administration's Global 2000 Report to the President, prepared by the State Department and the Council on Environmental Quality in 1980, with help from a gaggle of federal agencies like the Environmental Protection Agency and the CIA. The report, like the discredited Club of Rome's Limits to Growth report of 1972 and Robert Heilbroner's 1974 An Inquiry into the Human Prospect, predicted mass starvation, massive amounts of pollution, and increasing hunger and poverty for all by the year 2000 unless "the nations of the world act decisively to alter current trends."

"Decisive action," of course, was further government control of all resources. In his farewell speech of January 15, 1981, Carter told the nation, "If we do not act, the world of the year 2000 will be much less able to sustain life than it is now." Defeated for re-election, Carter clearly was miffed about not being able to carry out his statist agenda on energy, the economy, and the environment.

Carter was not the only one who foresaw disaster without a healthy dose of statism. Others believed Carter's plans were inadequate. The Washington Post, in its review of Global 2000, declared "the report's projections clearly err on the side of optimism.

Although the report's prediction of a global population of approximately six billion people by 2000 was accurate, its assessment of the quality of life that people would face clearly was not. For example, it absolutely missed the boat when it came to predicting the future of oil markets.

Conventional wisdom in 1980 was that the world have suddenly entered into an "Age of Scarcity," in which so-called cheap energy would have to give way to current realities. During the 1990s, the report predicted that people would see "rapidly increasing petroleum prices" that would hamper industrial growth and lead to famine in the Third World.

The "futurists" could not even grasp the fact that the wide disruption in oil markets during the 1970s was due more to the U.S. Government's ridiculous controls on domestic crude oil and its politically charged distribution system than any depletion of reserves. While economists recognize that any age is an "age of scarcity," Americans faced shortages that were directly caused by government interference into oil markets, not a new round of scarcity.

A month after Carter delivered his "The End is Near" speech, President Reagan lifted price controls from oil and allowed the free market in oil to resume control of distribution. Within a couple years, oil prices fell rapidly and even today they are far below the price levels of 1980.

Global 2000 and its companion publications managed to miss the mark on about everything else as well. The world is less polluted than it was in 1980, and the economies of many nations have improved substantially from their levels of two decades ago. The mass starvation, economic chaos, poverty, and environmental catastrophes predicted so confidently by the "experts" have failed to come about in the way they said they would.

North Korea, the one nation where mass starvation exists today, has actually been following the Carter prescription of increasing the power of the state over the economy.

Faced with being discredited by their very words, one would think that the apocalyptics would at least tread very lightly when it comes to making future predictions, and would at least recognize the efficacy of free markets. Unfortunately, that is not the case.

The most obvious example is the presidential candidacy of Vice President Al Gore, who is actually running on a platform that if he is elected, he will bring better weather to this country. The author of another discredited apocalyptic book, Earth in the Balance, Gore has managed to convince millions of Americans that once again the earth is on the verge of destruction unless the state intervenes into free markets in a mighty way.

While one can argue that the leviathan state has continued to advance during the last few decades, it is true that in some areas we saw something resembling a decrease in state power. Thanks to deregulation of energy and capital markets, we have seen a boom in high technology development.

Consumer choice has increased immensely, and the internet is further changing the way we live for the better. However, the persecution of Microsoft proves that politicians still can act the part of the bull in the china shop without recrimination from voters.

Prosperity is a fragile thing. Despite the best efforts of government, we are more prosperous today than we were in 1980.

However, politicians can wipe out many of those gains should voters allow them to do so. It would be tragic if the "expert" predictions of doom were to come to fruition because of those in government who ostensibly were trying to prevent it.

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William Anderson teaches economics at North Greenville College.