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Dear Mr. Berko:

Dear E.L.:

I don’t like economists, who are some of the most useless people on the planet. The economists I know are cross-dressers, drive Volvos, tend to be anti-social, their shoes squeak even when standing still, their cologne smells like Juicy Fruit and they have the emotional range of Formica. Former Federal Reserve Chairman Alan Greenspan, whose hobby is teaching cats to swim underwater, is a perfect example. As I’ve been telling audiences since 1998, “He ain’t the crispiest Dorito in the bag.”

But there is one economist for whom I have enormous respect, and his name is Joseph A. “Joe” Schumpeter (Feb. 8, 1883-Jan. 8, 1950). Joe explained capitalism and economic growth as a series of long waves, each lasting about 50 years. Joe tells us that these waves, or technological evolutions, cause “gales of creative destruction,” in which old industries are swept away and replaced by new industries. In the process, the new industries ramp up economic activity and employ more people who buy more goods, which increases demand and results in the employment of even more people.

Joe tells us that the first 50-year gale of creative destruction, roughly 1790-1840, was fueled by steam power. The efficiency and productivity of the steam engine increased the U.S. gross domestic product fivefold and created impressive employment gains.

The second gale of creative destruction, 1840-1890, was driven by the railroads, which replaced the wagon train and made it possible for people to move raw materials and finished products cheaper, faster and more productively. During those years, the GDP exploded fivefold and employment grew fourfold.

The third gale of creative destruction, 1890-1940, was supercharged by electric power. This inexpensive and easy access to energy increased manufacturing efficiency and labor productivity by orders of magnitude. It paved the way for a sevenfold surge in GDP and a sixfold increase in the number of employed Americans.

Cheap oil and the automobile drove the fourth gale of creative destruction from 1940-1990. Americans eagerly relished their newfound mobility, relocating to newly built suburbs. A 20-mile drive to work is now common, and most families own at least two cars. During those 50 years, U.S. GDP rocketed eightfold, and our work force grew fivefold.

Today we are in the fifth wave or gale of creative destruction, which is information technology. This wave is sweeping away all other technologies and industries and has the power to propel capitalism and the stock market beyond our parochial visions. We are on the periphery of that wave right now, and the best way to explain its magic is the following comparison:

Imagine it’s 1885, Grover Cleveland is in the White House, and a letter sent from Paris to San Francisco first travels by coach to the port of Marseilles, France, then across the ocean by boat to New York, overland by stagecoach and rail to California and finally to San Francisco. It takes 96 days and the cost in today’s coin is equivalent to $16. Today, we communicate by e-mail. A tap of the keys in Paris and electrons explode across a microchip at the speed of light as billions of pixels race madly across a monitor to send that letter in a fraction of a second at a fraction of the cost.

Jumpin’ Jehoshaphat, “ain’t” it awesome. We will apply this same leap in technology over the next 10, 15, 20 or 30 years to technological improvements in medicine, farming, genetics, education, fuel, computers, space and undersea exploration, planes, trains and automobiles. Certainly, this massive leap in technology is mankind’s most powerful innovation since the invention of the printing press in the 15th century. It is indisputable that the amount of technology that will be developed in the next two or three years will be greater than all the technology developed from the birth of mankind to today. So we have one heck of a future in store for us. Captain Kirk’s “Star Trek” is just a few corners away.

Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. ©2009 Creators Syndicate Inc.