In 2011, a solar power company called Selindra declared bankruptcy.

A company going bankrupt is not news, but Selindra was not just any company.

Its biggest investor was the federal government, which had given it $500 million.

That was news. But really, it shouldn't have been.

If history is any guide, it was quite predictable.

The government is a very poor investor, and always has been.

There are countless examples, but two should serve our purpose here.

After the Civil War, American leaders were anxious to bind the country's north, south, east, and west regions together with transcontinental railroads.

Congress, therefore, gave massive federal aid to build the Union Pacific, the Central Pacific, and later the Northern Pacific Railroads.

But all three of these roads had huge financial problems.

The Union Pacific, for example, was mired in financial scandal from its inception.

When bankrupt several times, and had to rebuild large sections of track, thanks to shoddy construction practices.

At that same time, James J. Hill, with no federal aid whatsoever, built a railroad from St. Paul to Seattle.

The great Northern. How was Hill able to do with private funds?

What the Union Pacific failed to do with the gift of tens of millions of federal dollars?

The starting point is incentives. The Union Pacific was paid by the government for each mile of road it built.

It was in the railroad's interest not to build the road straight.

The more miles it took the UP to cross Nebraska, for example, the more money it made.

Hill, by contrast, used his own capital. To make a profit, he had to build his great Northern Railroad sturdy and straight.

Hill's company remained in business for almost a hundred years until 1970 when it merged with other railroads.

The original Union Pacific, riddled with corruption and numerous other financial misdeeds, including the wholesale bribery of public officials, went broke within ten years.

The story of the airplane is even more stark.

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