A company with declining earnings and slowing revenue growth sold a small portion of itself to the public today for $18 billion. The underwriters for the offering priced the company at about 100 times its last 12 months’ earnings. By comparison, Apple and Oracle are selling at around 13 times earnings; industrial bellwether GE can be bought at about 16. If Facebook’s earnings rise enough to result in a P/E ratio similar to those companies, then today’s Facebook investors essentially agreed to give to the company the first seven-fold increase in earnings. In other words, Facebook’s earnings have to increase by 700% simply to make today’s price reasonable. It could happen, I suppose.

Taking a step back, we wonder whether the FB offering is a watershed moment of sorts — does the company represent some great new economic paradigm shift that will drive the American economy into another century of global dominance? No need to think about it too hard. The answer is, no, of course not. FB is, at best, an advertising channel. At worst, it offers no more long-term benefit to the economy than did the Pet Rock (which also arose from the Silicon Valley region). All those riches booked today by the company’s founders, employees and investors do not represent a present-value payment for greater American GDP growth. Those riches are simply transfer payments from new investors to insiders. Nothing new; just a reshuffling of a deck that isn’t growing any faster.

Business and technological developements that ultimately drive economies to greater heights involve productivity enhancements to making things. The “green revolution” in agriculture delivered profound improvements in making food. The industrial revolution delivered (and continues to deliver) profound improvements in making the rest of the stuff. The services sector…well, it only rides on the back of the first two. The notion of a “services economy” is a myth. The service sector only exists to either (1) serve the making-things sectors; or (2) provide entertainment and distraction, paid for out of the surpluses that improvements to the making-things sectors allow. In the first of these two, the services provided are really part and parcel of the making-things sector. If an auto plant hires a company to maintain its machines, those maintenance services are more rightly classified as a component of the business of making autos. The source of money to pay for these services derives from a manufacturing process.

Without a thriving making-things economy, there can be no thriving services economy. The one follows only from the surpluses created by the other. Even the health-care industry ultimately relies on its ability to keep more of us on the “contributing” side of the ledger, for longer.

Imagine an economy on an island with 5 inhabitants. Can it be a “services economy?” Let’s say the sole service is back rubs. If the island is a pure services economy, then the 5 people all sit in a circle, rubbing each other’s backs. That’s great. Except when it’s dinner time and there is no food. In order for there to be back rubs, some of the 5 people are going to have to stop rubbing backs and go hunt or grow some food. If 3 of those people can produce food for 5, then there is a surplus available so the other 2 can give back rubs in exchange for food. And, no matter how many back rubs those 2 people figure how to give, they can only be paid in the amount of surplus food grown by the other 3. Services are only possible if some of the inhabitants are freed from the grind of making stuff. And that only arises from manufacturing productivity.

There is nothing about Facebook that offers the prospect of productivity enhancements to the core of our economy. So don’t get too excited. Business developments worth getting excited about offer the potential to get more out of less. Horizontal drilling. Robotics. A fix for the obesity epidemic. Energy efficiency. Materials science. In other words, technologies that do more than fill up our idle time.

A neat way to upload vacation pictures or promote movies? Not so much.

The future of the American economy depends on our leadership in figuring out how to make things and to take care of one another, at ever-decreasing cost. Back rubs are nice, but they don’t pay the bills.