It's one thing to criticize Mitt Romney for being a businessman with the wrong values. It's quite another to accuse him and his former company, Bain Capital, of doing bad things. If what Bain Capital did under Mr. Romney was bad for America, the burden shifts to Mr. Romney's critics to propose laws that would prevent Bain and other companies from doing such bad things in the future.

Don't hold your breath.


Newt Gingrich says Bain under Mr. Romney carried out "clever legal ways to loot a company." Mr. Gingrich calls it the "Wall Street model" where "you can basically take out all the money, leaving behind the workers," and charges that "if someone comes in, takes all the money out of your company and then leaves you bankrupt while they go off with millions, that's not traditional capitalism."

Where has Newt been for the last 30 years? Leveraged buyouts became part of traditional capitalism in the 1980s, when financiers started borrowing piles of money, often at high interest rates, to buy up the shares of companies they believed to be "undervalued" -- Wall Street-speak for companies that can be squeezed for more short-term profits. The financiers back the loans with the companies' assets, then typically sell off divisions and slim payrolls, and resell the companies to the public at a higher share price -- pocketing the gains.

These are usually good deals for the financiers. The $25 billion buyout of RJR Nabisco in 1988 netted the partners of Kohlberg Kravis Roberts around $70 million each. Most of Mitt Romney's estimated $200 million fortune comes from the same kind of maneuvers.

But the deals are not always good for the companies or their workers.

Some workers lose their jobs when the company downsizes. Others get pink slips when the company, now laden with debt, can't meet its payments to creditors and eventually goes bankrupt. According to the Wall Street Journal, of 77 companies Bain invested in during Mr. Romney's tenure there, 22 percent either filed for bankruptcy or closed their doors by end of the eighth year after Bain's investment.

But, hey, this is American capitalism -- at least as it's been practiced for the past three decades. And it's perfectly legal.

Is Newt proposing to ban leveraged buyouts? Or limit the amount of debt a company can take on? Or stop financiers from flipping companies -- taking them private and then reselling them to the public at a vastly higher price?

None of the above. Mr. Gingrich isn't putting forth any proposals. He's just out to get Mr. Romney.

Rick Perry criticizes Mr. Romney and Bain Capital for pushing the quest for profits too far. He calls it "vulture capitalism." "There is nothing wrong with being successful and making money," says Governor Perry. "But getting rich off failure and sticking someone else with the bill is indefensible."

Yet getting rich off failure and sticking someone else with the bill is what Wall Street does every day, and it's also legal. The Glass-Steagall Act used to separate commercial from investment banking. But ever since the act was repealed in 1999, investment bankers have been gambling with commercial bank deposits -- other people's money.

So is Mr. Perry proposing to resurrect Glass-Steagall? Not a chance.

Messrs. Gingrich, Perry and other Republican critics of Mr. Romney talk about people who lost their jobs as a result of Bain Capital's strategies, and the hardships they and their families have endured -- including loss of homes, health insurance and savings.

Millions of Americans are facing similar hardships, but the Republican presidential candidates haven't shown much concern. To the contrary, they'd let millions more lose their homes; they've vowed to repeal the health law President Obama championed, leaving tens of millions uninsured; and they oppose extending unemployment insurance.

I'm all in favor of reforming capitalism, but you'll permit me some skepticism when it comes to criticisms of Bain Capital emanating from Mr. Romney's Republican opponents. Apart from their assault on Bain Capital, every one of them has been a cheerleader for financial capitalism of the most brutal sort.


This has been the history of the GOP since the 1920s -- fighting all attempts at making capitalism work for ordinary people. By contrast, the party that has repeatedly saved capitalism from its own excesses and thereby preserved capitalism is the Democratic Party.

So the interesting question raised by the current hubbub over Mitt's leadership of Bain Capital isn't why Republicans have no ideas for making capitalism work better. It's what if any concrete reforms President Obama will propose in the general election when, assuming Mr. Romney becomes the Republican nominee, Mr. Obama also begins blasting away at the consequences of Bain Capitalism.

Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of "Aftershock: The Next Economy and America's Future." He blogs at