In late September, the U.S. Department of Labor published its latest data on Multifactor Productivity for Manufacturing Industries (2011 is the latest year for it has released such findings). Here the combined inputs, outputs and total multifactor productivity were ranked and compared for all American market verticals. Percentage gains and losses for everything from motor vehicles to medical equipment, turbines and transmission equipment -- and, yes, computer and peripheral equipment -- were ranked and compared. Not only did the computer and peripheral sector lead the decline in total productivity, but its drop was in the double digits, falling by easily in the upper mid-20% range by some measures -- despite an overall increase in generic semiconductors and electronics components.
Be honest: Is this macroeconomic sucking sound in information technology really such a shock? Of course it isn't, if investors really look at the fundamentals of Twitter. Based on the 500 million tweets the company's S-1 says it handles each day, that grosses up to roughly 182 billion tweets per year. Assuming $316 million in annual revenue, Twitter's revenue per tweet is just $0.0017. And worse, that per-tweet revenue does nothing but decline as traffic explodes faster than new dollars flow in. It's a troubling slip in per-unit revenues that plagues the entire Internet economy. So now the stormy macroeconomic mountain pass that investors must trudge through is revealed through the digital-age mist. Yes, riches are certain for those insiders, such as the founders of Twitter and Google and Facebook, lucky enough be at the head of the Information Economy wagon train. But for the rest of us settlers, pretending we are at the front of the line when we are most definitely at the back, life is far grimmer. Yes, Twitter may follow Google to hit $1,000 a share in the next few years. But given the overall macroeconomic step backward inflicted by the information economy, does anybody expect a major equity index such as the Dow Industrial Average to break even 20,000? The long ride ahead will be a zero-sum game where the only way one investor gets paid is to eat another. On a ride like that, nobody gets rich.