The Next Sparks for the Economy Could Surprise Us

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"The mobile Internet will create more wealth and destroy more wealth than the mainframe computer, the mini-computer, the personal computer, and the Internet, the four previous waves" of technological innovation, says David Darst, managing director and chief investment strategist at Morgan Stanley (MS) Global Wealth Management. "It will affect everything from Costco (COST) to Tesco (TESO), FedEx (FDX) to JPMorgan Chase (JPM)."

Alternative Energy Push

What's more, even as mobile Internet investment gains momentum, another technology may come into its own, thanks to a coming rise in the price of oil. Yes, oil is down recently with growing concerns about global economic growth. Nevertheless, with the global economy barely moving out of recession, it had risen some 30 percent from $67 a barrel in the fall of 2009 to $87 in April. It isn't hard to see oil climbing to some $100 a barrel with synchronous global economic growth. And Charles Maxwell, the dean of Wall Street energy analysts at Weeden & Co., sees even higher oil prices ahead. He predicts that world oil production will peak sometime from 2015 to 2020. Oil will reach at least $150 a barrel around 2015 and it could go to $300 by 2020.

"The biggest boom will be energy efficiency and conservation. That will get bigger and bigger," he says. "Energy technology will be like information technology was for the market over the last 30 years."

A number of oil industry companies will benefit. But so will companies like General Electric (GE). Almost everything the company does has a heavy energy component, such as compressors, train engines, and the like. Says Maxwell: "There will be a need to retrofit the capital infrastructure of the world and the U.S."

To be sure, the potential economic growth engines I've cited here may not be total surprises to everyone. (Perhaps we should call them Navy Blue Swans.) But the fact remains that economy-boosting innovations rarely take the shape we expect.

As Yogi Berra famously quipped, "It's tough to make predictions, especially about the future." Nuclear energy, nanotechnology, and biotechnology never quite lived up to their hype, for instance. Nevertheless, over the coming decade, the combination of the mobile Internet and the push for alternative energy could spark the next wave of creative destruction, economist Joseph Schumpeter's evocative metaphor for the process by which new technologies, new markets, and new organizations supplant the old.

Let's hope so.

Farrell is contributing economics editor for Bloomberg Businessweek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace. His Sound Money column appears on Businessweek.com.

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