I think bad investments are not just stuff we do, countries could do that very well too. If you are a government and you are getting a ton of taxes there is two things you should use that for, one of them is to make your people happy and their life easier, the second one should be to find stuff that would make profit for the government as well.
I do not understand all of this "capitalist" BS that forbids governments to have companies, many governments actually do have business' but they do not look like business, like DMV type of places exists or postal office type of places exist, not just in one nation but in all nations and they do make a profit time to time, or at least they should.
So, at the end of the day governments should get our taxes, build jobs and business and after a while they will be making their own profits and taxes will not have to go up, or it could even go down.
I overall agreed with your position - bad govs' decisions could lead to a huge economical problems, we all human and government is just a group of people.
However, you should know that govs are not allowed to have businesses for a reason:
Governments regulate business market and laws, so it would be very unfair for them to be a part of the game where they do decide what the rules are.
And politicians as I already mentioned have power in their hands, so it would be again kinda unfair to allow them have even more power