The economy may be troubled, but one area is thriving: social media. They begin with Facebook and extend through a dizzying array of companies that barely existed five years ago: Twitter, LinkedIn, Groupon, Yammer, Yelp, Flickr, Ning, Digg — and the list goes on. These companies are mostly private but have attracted the ardent attention of Wall Street and investors, with Facebook now worth a purported $75 billion and Groupon valued at close to $25 billion.
There can be little doubt that these companies enrich their founders as well as some investors. But do they add anything to overall economic activity?