Venture capital is a hard business. Ask any venture capitalist.

This won’t come as any shock, but government has an especially lousy track record as an investor in developing companies. This week’s bankruptcy filing by A123 Systems Inc., the Waltham battery company that received more than $130 million in federal support, is just the latest example.

The government directed federal stimulus money to A123 — it didn’t actually buy stock in the business — hoping those funds would create jobs and help grow a new alternative energy industry in America.

There are lots of other well-known government investment busts, both nationally and locally. Before A123, the bankruptcy of federally supported green energy giant Solyndra made national waves last year. Closer to home, Evergreen Solar and its big plant in ­Devens went bust despite tens of millions of dollars from the state.


The federal government is hardly the only investor that stands to lose money on A123. Venture capitalists — real VCs — put hundreds of millions of dollars into the company with mixed results. Public investors spent more than $500 million buying A123 shares in company stock offerings since 2009. General Electric Co. owns nearly 5 percent of the company.

One important distinction: All those other investors had clear financial goals when they bought into A123. And they were using their own money, or cash clients had entrusted to them for investment.

But government decisions to bankroll individual companies aren’t simply dangerous bets that fall far outside the skillset of most elected officials. They are bad policy.

Those officials don’t have any business using public money to pick — and perhaps make — individual winners in any industry. That goes beyond the scope of any reasonable economic development strategy and invites suspicions of corporate cronyism.

True, sometimes we need new businesses that no investor in his right mind would back. But that rarely translates into a rationale for public officials to invest in individual companies.

More constructive roles for government are all about creating common opportunity and letting commercial markets decide the most effective way to use it. A few examples:


■  Infrastructure. Government routinely builds roads and bridges that make business development — and commerce itself — possible in particular areas. Infrastructure can mean a lot more than pavement, but those kinds of investments create resources that can be broadly utilized.

■  Education. Spending money to give people the skills or knowledge to perform jobs — especially work in developing industries — creates important new human resources. ­Education and training is a no-brainer in any economic development plan.

■    Knowledge. General scientific research, often conducted at universities, has developed the knowledge building-blocks that investors and business have used to create new products in all sorts of developing industries. Much of Greater Boston’s booming biotechnology industry depends on academics and their research.

■    Creating demand. Sometimes an industry needs a big customer to get off the ground. The Pentagon was an important customer for America’s nascent computer industry many years ago. State officials across the country are creating new competition today by requiring utilities to buy more alternative energy.

None of these ideas are perfect and all can be abused. But the best ones create opportunity and let the right people decide how it is put to work.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.