Rubbish IT Systems Cost the US At Least $40 Billion During Covid

An anonymous reader quotes a report from the Financial Times: A lot of critical financial and government infrastructure runs on Cobol. The more-than-60-year-old mainframe coding language is embedded into payments and transaction rails, even though there are very few Cobol-literate coders available to maintain them. The big argument in favor of sticking with Cobol systems is that they work. The catch is that, whenever they stop working, it is difficult to figure out why. That's not good in a crisis, which is exactly when they're most likely to break. Covid-19 put a lot of strain the US state benefit systems.

The ones that used Cobol for processing unemployment claims failed spectacularly, according to a new working paper from The Atlanta Fed: 'States that used an antiquated [unemployment insurance]-benefit system experienced a 2.8 percentage point decline in total credit and debit card consumption relative to card consumption in states with more modern UI benefit systems. Using this estimate in a back-of-the-envelope calculation, I find that the lack of investment in updating UI-benefit systems in COBOL states was associated with a reduction in real GDP of at least $40 billion (in 2019 dollars) lower during this [March 13 2020 to year-end] period

The paper uses Cobol as a proxy for old and inefficient IT, not the direct cause of failure. Claimants faced much longer delays in the 28 states that still used Cobol in 2020, both because of the unprecedented volume of claims and the difficulty updating systems with new eligibility rules, author Michael Navarrete finds. As an aside, one oddity of the data is that Republican-controlled states were more likely to have replaced old IT systems, even though their standard unemployment insurance payments are lower on average. Why? Absolutely no idea, but here are the maps. And, once adjusted for state politics, here's the key finding.

Read more of this story at Slashdot.