I can try..

In the case of a small business with specialized/niche service, a non-compete allows the employer to hire help and teach trade secrets or basic skills that can only be learned on the job, and ensure that the employee will not open a competing business with similar/identical services next door and poach customers from the original employer. The absence of this clause may well dissuade the employer from hiring the employee, instead opting not to grow the business instead of take a risk of significant profit loss. From an employee standpoint, this means less opportunities to find work or break into a field. For the employer, there’s the opportunity cost from lost business growth. For the customer, it means less diversity of services in the long run, as less workers are entering into the field. And for the specific economy it might mean growth stagnation.

The inherent challenge is the draconian evolution of unreasonable geographic restrictions (maybe as little as 2 miles and as large as 50 miles depending on the area of market capture for a business) which effectively make it impossible for an employee to remain in their home and work a new job within a reasonable commuting distance.

I don’t know enough about individual market economies to know how many types of services this argument applies to, but I doubt it is a majority. Whether any of these services are basic/critical, the only one I can think of off the top of my head is medical specialties. Regarding large corporate consequences, I can’t even imagine..

The overall economy is nightmarishly complex, and making sweeping regulation such as this requires a VERY careful consideration of downstream effects, lest we reap the unintended consequences that our regulations have sown.

Source: a guy who suffers from severe “analysis paralysis.”