There are a number of barriers that are seen in any trade. The concept of free trade is a little intriguing if you consider it is only theoretically possible. This is because, if it was only in theory, then why are there quotas and tariffs that are used?
The main reason for this is very hard to understand. It is easy to see the benefits that are got, but hard to see how these tariffs’ costs are being diffused. It has to be understood the quota or the tariff is the one that leads to a rise in the price of the product that you are looking for. This, in turn, will harm the consumers who are in need of it.
Though it is harmful to the consumers, it is very much of benefit to the producers of the product. In case the amount of harm that is caused is very unclear, then there is lobbying that happens in this case. This would let the producers benefit more. This lobbying is done in order to protect them. In case there is a benefit on the side of the producers are clear and are concentrated
In case there is a benefit on the side of the producers are clear and are concentrated in very few areas, then the problem arises for the producers. It would be the time for the producers to lobby for protection.
There are problems that arise in both the cases. This issue is not only seen in the case of tariffs and quotas but in other sectors too. This happens in all the cases when there is an outward shift in the production possibility curve.
This can happen in a complex social system in which some are benefitted while same are harmed.
For example, the production of automobiles was beneficial to those who were producing it. But it was not good to the ones who were producing buggies. The electronic calculators were developing but this led to the fall of the slide rules and also the mechanical calculators.
The origin of Luddites:
It was in the year 1811 that the craftsmen had organized bands called as the Luddites. They were the ones who protested against these things by way of violence. They damaged the machines in the textile industries that were causing damage to their trade.
The list of such things happening is really very long. But this destructive nature was the one that was given the name of Luddites. This is also known as the creative destruction. This was the way how the name had come into existence.