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Creation and Destruction of Value in Technology

Media Companies made $18 Billion revenue in 2005 on classified ads, plummeting to $9 Bill. in 2008, loosing half of their business, because Craig Newmark and his Craigslist arrived on the scene providing free classified ads. Business Analysts estimate craigslist revenue in 2008 at $81 Mio. If you put this together, and see that $9 Bill. in economic activity have been replaced with $81 Bill., this would mean that productivity in classified ads as increased by ELEVENTHOUSAND PERCENT in three years. When I read that macroeconomists in major magazines, such as businessweek, expect the economy to rebound, because labor productivity increases at an unsustainable long term rate, I have my doubts, I’m deeply concerned that they have it wrong this time.
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