Cashing Out

The private-equity business isn’t new, but the attention it’s lately been getting sure is. Carlyle, Blackstone, and some of the industry’s other leading firms have been around for more than 20 years. For most of this time, doing whatever it is they do, these companies conducted themselves with painstaking discretion and, so far as public opinion was concerned, operated invisibly. No longer. In the past year or two, the public has realized that private equity’s footprint on American business and finance is huge. People have also noticed—partly because the industry’s leaders have been foolish enough to show them—just how much money some of its executives are making.

For reasons I will come to in a moment, no one can be sure whether private equity is going to soar even higher or fall to earth. If ...