Political economy is not politics plus economics.

The Financial Times is running a short commentary by Harvard economist Jeffrey Frankel on the seeming lack of success that Republican administrations have had in prodding the economy. Frankel suggests that Republican presidents have too easily given in to disparate business interest groups. These interest groups desire economic policies that favor their businesses but disfavor economic growth on the whole -- for example, tariffs in favor of domestic manufacturing sectors and lax enforcement of antitrust competition laws.

Brad DeLong has added his own remarks and quoted the article.

If you're not familiar with this sort of argument, think of it this way. We can raise tariffs on steel. The steel industry in the eastern United States may see somewhat higher revenues. The reason that sector will have higher revenues is that they can raise prices; domestic steel refiners can put higher prices on their goods, pricing up to the after-tariff price of competing imported steel. They might even be able to pull off underpricing the after-tariff price of the competing steel. Still, the market price of steel for purchasers within the United States rises. Therefore, the costs increase for any new construction, heavy machinery, and other domestic manufacturing that require steel. (Meanwhile, costs for comparable manufacturing overseas do not increase.) Also, in certain economic conditions, less steel will be produced, and we end up paying more for less. In any event, the only winners are the domestic steel manufacturers.

Tariffs are wealth transfers to the protected domestic industry. The wealth is transferred both from the targeted foreign industry, who cannot sell as much here, and from the domestic purchasers of the goods, who forego otherwise efficient construction or manufacturing that they might have undertaken, or who undertake it at greater cost.

I'm pretty sure I learned that in introductory microeconomics. I feel like my econ classes were a long time ago, so someone more skilled can tell me if I'm off base here.