What's wrong with private equity? Debt. What Mitt Romney and Sam Zell have in common.

A lot of the debate over Mitt Romney's time at Bain Capital has been focused on how many jobs he did or didn't create, did or didn't destroy. That's understandable, given that we're in a time of sustained high unemployment, but I'm not sure that tallying lost jobs really gets to the heart of what might be objectionable about Romney's business practices.

The problem is debt.

In the case of the shuttered Kansas City steel mill at the center of the debate, the chain of events is pretty clear:

• Bain Capital bought the steel mill in October 1993, putting up just $8 million of its own money to gain majority control—even though the total purchase price was $75 million. 

• The next year, Bain had the company issue $125 million in bonds—debt used to pay Bain itself a dividend of $36 million in 1994. Understand again: Bain made a quick profit on its investment, but it wasn't by helping the steel mill earn greater profits—but by having the mill take on a chunk of debt.  

• Now: It's true that Bain used $16 million to buy another steel mill the next year—it's not as though executives were using all the cash to light cigars with $100 bills—but this is also true: The Kansas City mill took on another $125 million in debt to pay for the acquisition and merger. 

• All of which means that the Kansas City steel mill in 1995 had $378 million in debt. Its profit that year was $32 million. You can see where this is headed.  

• When it finally filed for bankruptcy in 2001, the combined company had debts exceeding $500 million. The plant's workers lost their jobs, and ended up with reduced pensions because the retirement funds had been under-funded.

In the wake of the bank bailout, there was a lot of talk about our economy privatizing profit and socializing risk. The problem here is just a bit different: Bain Capital kept the profits to itself, but largely externalized the risks of its business practices. That's smart, on one level, but it certainly belies talk of investors being "risk-takers" and "job creators."

I think I'm a little sensitive on this topic because journalists have been hurt by this kind of activity. Sam Zell bought the Tribune Company a few years back by investing $315 million of his own money—not chump change, I suppose, but a pittance compared to the overall $8 billion purchase price, most of the money borrowed from the employee pension fund. The company went into bankruptcy soon after, and the workers were screwed.

It's a little bit like me buying from you the car your son uses to get around, forcing your son to lend me the money to make the purchase, crashing the car, and getting to keep the insurance check without repaying your son the money he lent in the first place.

The steel industry in America has been dying for years. But Bain's practices hastened the Kansas City mill's demise—and it wasn't Mitt Romney nor Bain Capital that got stuck with the fallout from those practices.

Romney is running for office based largely on his business acumen. So let's be clear: Finance is a necessary component of a market economy, and while a market economy isn't necessarily utopia, it's often the best way of raising the living standards of the most people. Not everything done in the name of the market economy is wise or even good, however, and criticism of those bad acts and bad actors isn't—as some would have you believe—socialist.

There's a problem—for society, for morality—when a company can profit from its bad decisions while sticking the little guy with the consequences. It's wrong, plain and simple.