As I was driving to the radio station yesterday, I was flipping back and forth of my new Sirius satellite radio between Fox News and CNBC…and (at least subconsciously) yelling at the radio when hearing each of those stations.

On Fox News, Chris Wallace was interviewing Barack Obama’s new Chairman of the Council of Economic Advisers, Austan Goolsbee, who was making arguments that I’d expect even a modestly attentive student of basic economics to shred.

In particular, Goolsbee, who is a rather well-spoken guy and much more political than I’m used to hearing from a government economist, argued that tax cuts for upper-income earners should not be extended because the rich are more likely to save their extra money rather than spend it.

This argument is economic idiocy for a couple of reasons.  First, during economic downturns like this, people of all economic statuses tend to save more and spend less, tend to pay down debt rather than buy stuff.  It’s why the one-time “stimulus” checks during the Bush administration created far less consumer spending than the government predicted, and why the far bigger Obama “stimulus” bill has also done almost nothing to stimulate consumer demand.

This is entirely rational, of course.  People have been woken from their unsustainable wild-spending, using homes as ATMs, debt-laden reverie and are facing a brutal hangover of reality.  People are realizing that their kids’ and grandkids’ economic futures depend on fiscal responsibility today.  It’s only the left, including the Obama Administration, who remains intent on a sort of reverse-inheritance policy, piling massive future taxes on today’s younger people in order to transfer money to adults, especially adults in labor unions.

The second reason Goolsbee is not just wrong but dangerously wrong is the Keynesian’s misplaced intense focus on spending, as if the only economic activity with any benefit is going to WalMart or Best Buy.  Where does Goolsbee think the capital comes from to start the businesses which create the jobs which the administration claims to want created?  It comes from people with excess capital being willing to save it (in which case banks then loan it out) or to directly loan or invest the money to new or expanding businesses.

When’s the last time your supermarket check-out clerk or car mechanic was an angel investor or contributed to a venture capital fund or even put substantial savings in a bank?  The “middle class", especially the lower half in income terms, is relatively insignificant in fueling the economic engine to grow the private sector.  As I said, that can only be done by people with excess capital, i.e. more money than they need to service their own debt and pay their own bills.

The worst thing government can do during a recession is to discourage entrepreneurship and cut off its life blood, which is risk capital or at least available bank loans.

Goolsbee’s economic rationale flies in the face of both common sense and repeated lessons of history.

But this government just doesn’t get it.  This morning, on CNBC, Joe Kiernan was talking to some economist whose name I didn’t catch.  Kiernan suggested that maybe the economic plans of Obama are “justified…if you believe that for the last 30 years there has been an increase in wealth disparity."  The economist didn’t buy it, to which Kiernan said something like “well, you’d better get on board with reallocation of assets because that’s what’s happening.”

I also want to mention the CNBC show I heard, an interview with Warren Buffet and Bill Gates.  A question was asked of both men what they most admire in the other.  Gates said he admired Buffet’s willingness and ability to teach.  Whatever.

But what made me (want to) yell at the radio was Buffet’s answer about Gates: What he admires most about Bill Gates is Gates’ determination to give away his money and spend his “time, energy, and talent…giving back".  While it’s fine to be charitable, and while I appreciate Gates’ focus on trying to eliminate disease and improve education, that can’t be what’s MOST admirable about him.  What’s MOST admirable is that he had the right combination of skills with a sprinkling of luck mixed in that he was capable of amassing as much wealth as he has without ever forcing anyone to do anything.  Gates has no obligation to “give back” because he never “took” anything.  He earned it all, and that’s what’s most admirable about him.  What’s least admirable about Warren Buffet is that he can’t see it.