What is it about working in the government that makes politicians that seem so sensible in private conversation so prone to terrible decision-making?  Are they actually this bad with their own finances, or do their seemingly-compulsive bad investments happen only with other people’s money?  It seems like every time I turn around, I am reading another article about a bad investment the government has made, or is at least considering.

Yesterday’s news brought two great examples of how the government is a perfect “reverse business barometer” (that is to say, whatever they want to do, as a good investor you should do the opposite).  Since they are both part of the subscription content on The Daily Record, I will summarize them for you.

The Maryland Horse Industry Board (part of the Department of Agriculture) has decided to test the waters on a “state horse park.”

Quick summary: We will soon be committing almost $80,000 to studying the viability of a state horse park in Maryland -- an idea that we are borrowing from the state of Kentucky.  We don’t know how we can afford to pay for the project yet, but we are already anticipating that it will bring over $9 million dollars into the state each year as tax revenue.

Why this is a terrible idea: Three reasons.

1) The thoroughbred racing industry is already dying in this state.  We have spent millions upon millions over the past several years trying to prop it up, and to no avail.  I can tell you whether or not this is a good idea, and I’ll do it for a lot less than $80,000…

2) The fact that we have no idea how it would be paid for is a good sign that we shouldn’t be considering such a project.  This is like car shopping when you know that you have no down payment and no available credit.  Pointless, and potentially very bad (if you can’t control your spending -- like our government).

3) Starting a big project like this one simply because you saw it somewhere else is not always a good idea.  If our politicians went to Disneyworld, would they decide we need one here, and spend taxpayer dollars to build it?  Even if people show up to our MD horse events, we may have just spent lots of money to shuffle them from there to here.  We wouldn’t be creating any extra wealth at all.

Maryland officials are working on restructuring the debt for the Hippodrome Theatre so that they can continue operations.

Quick summary: The Hippodrome Theatre owes $1.8 million in debt service each year.  The deal that the state struck was that the theater would contribute $800,000 annually from ticket revenues and then the remaining $1 million would be kicked in from the General Fund (your tax dollars, yes).  But ticket revenue has fallen all the way to under $400,000 last year, leaving more slack for taxpayers to pick up.

Why this is a terrible idea:  The government needs to admit that it is a horrible businessman.  This, like Rocky Gap, is another failed venture that should have been taken over by the private sector a long time ago.  Especially given the fact that we are facing perpetual deficits, it seems like it would make a lot more sense to sell off these underperforming assets and stop throwing money at them.  But we never really do that, do we?  Instead, we “restructure” -- spreading the pain out for longer and longer each time, but never really solving the problem.

I wish it wasn’t so easy to look at what the government does every day and say, “That’s ridiculous.”  But it is.