We are now witnessing one of those illuminating episodes in which American business demonstrates its political insensitivity, silliness and -- dare one say it? -- stupidity. The matter concerns savings and investment and the alleged "incentives" needed to spur a sufficient amount of both.

A good case can be made that American savings and investments have lagged and, therefore, need to be spurred. But it does not follow that every proposal that carries the savings and investment label will do the job.

Such fine distinctions, however, are often lost on business groups. A host of them are eagerly supporting congressional proposals that would allow taxpayers to exclude from taxable income some interest on savings account and other investments. Proposals vary, but the most likely candidates for enactment would allow $100 to $200 exclusion for single taxpayers and twice that much for couples.

In practice, such measures would do little to encourage additional savings or investment, because most affected taxpayers already have savings that earn the covered amounts of interest. They would simply be rewarded for doing something they are already doing. Meanwhile, the measure would squander needed revenues that could be better used in more comprehensive individual and corporate tax cuts. Depending on whether the $100 or $200 deduction is adopted the administration estimates the tax loss between $1 billion and $2 billion.

There is something symptomatic in this episode of a larger problem. To expect business groups to become blind advocates of the "public interest" -- whatever that is -- is to ask the impossible and the undesirable. Ours is a democratic society in which, for good or ill, the "public interest" emerges from the clash of competing interests. Private business plays a needed and proper role as advocate of consumer choice and long-run economic efficiency.

But it is not unreasonable to expect businesses to have adjusted with more sophistication to the large and unavoidable part that government now plays in many heretofore private decisions. It is not unreasonable to expect major industries -- in their own interest as much as anyone else's -- to fashion proposals for public policy that make plausible (the key word) links between corporate objectives and national goals.

The past decade is littered with evidence confirming business' inability to make such a marriage.

Item. The nation and the oil industry would have been better served had the companies with Alaskan oil routed their pipeline through Canada into the Mideast rather than across Alaska sending the oil (via tanker) to California; likewise, it was clear that, sooner or later, a Canadian route would be required to move Alaskan natural gas and, possibly, other Canadian and Alaskan oil.

Better to resolve the difficult environmental, legal and political conflicts in one struggle, not two. The oil companies thought otherwise, and the result is an oil glut on the West Coast and protracted controversy over the construction of new oil and gas pipelines. No one really knows when, if ever. Alaskan natural gas will reach the "lower 48."

Item. The nation and the auto industry would have been better served had the major car manufactures, back in 1974 and 1975, loudly and i insistently advocated a stiff gasoline tax, to be introduced gradually as a way of encouraging a smoother transition to more-fuel-efficient cars. A few auto executives made low murmurs in this direction, but nothing more. Consequently, the country lacked clear-cut signals from Washington about the long-run scarcity of gasoline; the auto industry went on a roller-coaster ride of changing consumer demand for large and small cars. The industry's current sales collapse and the near bankruptcy of the Chrysler Corp. are the partial results.

Item. The nation and the electric utility industry would have been better served had the utilities enthusiastically embraced "conservation" as one way to assure ample power supplies. A few utilities have, but, in general, the industry has hesitated -- a hesitancy sympolizedd by its reluctance to support federal legislation allowing utilities to finance customers' investments in energy-saving home improvements. Not only has this unwisely restricted utilities from a potentially profitable line of business, but it has also kept them unnecessarily insulated from trends that affect the underlying demand for electricity, which they regularly misestimate.

These episodes involve energy, but the attitude that produced them is widespread among business. In general, business groups recognize that government has become more intertwined in their affairs, but the reaction has been mostly one of style, not substance. They hire more public relations consultants, publish more glossy reports, spend more money on image advertising and lobby more actively.

This has produced superficial change and a great hue and cry among some "public interest" groups, "liberals pundits that business lobbyists are running Washington to the exclusion of everyone else. That allegation is mostly antidemocratic nonsense. The increase in business lobbying stems directly from the increase in government laws and regulations that business groups, by and large, have opposed. Business groups have a right to defend themselves, and the fact that their presence is more visible now than 10 or 15 years ago attests more to their weakness than anything else.

The very number and size of the groups mean that they can block some measures and help pass others, but their basic approach to public policy is usually shortsighted and denfensive. The result is often bad legislation: the bailout of the Chrysler Corp.; trade laws that, masquerading as "fair trade," discriminate against imports and provide unnecessary protection for domestic industries; ceilings on interest rates for deposits at banks and savings associations -- a measure supported, ironically, by the same savings associations that also urge savings "incentives."

Business leaders usually assume that what's good for their business is good for the country. Often, they don't understand either.