[clairity]

to be clear, PE isn't always purely extractive, but when it is, it can be highly destructive. sometimes a business is so mismanaged that debt (and the pressure it adds) and new management is all that is needed to right the ship.

PE itself is a bloated industry because we have too much money being extracted out of the real economy going into the pockets of the already wealthy who don't know what to do with it, so they hand it to a money manager (i.e., PE) to make more money for them, not knowing what to do with those potential future earnings either. this is the kind of economic inefficiency that concentrations of capital brings, in direct refutation of the common economic argument that the wealthy are better at investing money (i.e., more capital efficient, which in turn supposedly adds more real productivity to the economy).

small, local amounts of wealth are more capital efficient, but large, distant amounts are not.

[CPLX]

Private equity, as a concept, just means a firm or group of people that owns something. We're posting these comments right now on a website owned by a private equity firm. Technically if I sell my lawn service to some guy with an LLC it's private equity.

Private Equity, as a distinct industry, is fully engaged in looting of the type contemplated by the principal-agent problem:

https://en.wikipedia.org/wiki/Principal–agent_problem

[clairity]

not sure what point you're making here, but my point was that there is room for little PE, but not big PE, because little PE can have the effect of making capital more efficient for the overall economy. it's the same with arbitrage--a little arbitrage is good for the economy, but large, systemic arbitrage is extractive for no overall benefit.

the principal-agent problem emerges in any business where professional managers are employed (which usually happens when a business gets too big for its britches), so it's not PE-specific.