The most common consequence of a regulatory regime is a general lessening of competition in the regulated sector. The "stronger" the regulation, the fewer in number will be the companies that operate in the regulated sector. Sometimes monopoly or oligopoly is even a stated objective of government, whether under the guise of "state champions", "Crown corporations", or "utility". Restricted professions abound in modern countries, including lawyers, doctors, and often hairdressers. Licenses, capital requirements, reviews, hearings, applications - modern state apparatus has many ways of making it harder for business people to do what they do. Investors like the winners, describing their regulatory status as a "moat" or what economists call "barriers to entry". How each barrier works is different, but the net result is that fewer entrepreneurs apply themselves to starting new businesses in regulated areas, and incumbents gain a leg up that they wouldn't have under a more competitive economy. Customers lose out on options they'll never know they could have had.
The savvy reader will now stop and say: "but what about the benefits?". The costs may be enormous, but aren't the benefits high? That may be true, but if there's a way to reduce the costs and gain most of the benefits, wouldn't that be a better approach?
Regulatory barriers don't have to be all or nothing. In many cases there could be a "regulatory ladder" instead of a regulatory barrier. A ladder would allow new entrants to enter a restricted area in a smaller-scale capacity, and then earn more scope by proving their worth. For regulated professions, this might look like an apprenticeships, with gradations like a driver's license. For regulated businesses, this might look like customer or risk limits that can be expanded. Right now, most regulations propose an "all or nothing" scheme that is either met or not.
Many of the best jobs in Canada are reserved for people with the right regulatory status. Many of the most profitable businesses face little competition because of the difficulty in starting a competitor and gaining a license.
A regulatory ladder would open up new options for people who have been shut out of profitable industries. High barriers to entry for job seekers and startup founders mean that better-connected people are able to gain the benefits of certain trades, while others can only watch. This takes the form of stagnant large players, underemployed new immigrants, and a less dynamic economy. There are significant equity advantages to a regulatory ladder approach. And ultimately these benefits are reaped by all of society as new service providers emerge with new models that better serve Canadians.
Regulatory ladders are more complex to devise for understaffed regulators, but the costs of inaction are high. A shift in mindset is needed toward risk-based regulation that takes into account the burdens of 75 years of the Canadian administrative state's approach to the economy. Regulatory ladders, not regulatory barriers, are the more fair future that better balances the government's regulatory goals with the rest of society.
A concrete example of a regulatory ladder approach is the driver's license system in Ontario, where drivers pass several levels of test, with expanded scope of practice for each level. The same approach can be taken in other fields so that people can start work, prove themselves, and expand.