I keep hearing this, but it never happens. Despite attempts to get jurisdictions to race to the bottom, businesses simply follow the money/markets: I can bet you a hefty sum that Alameda will never go without electrical contractors.
You *really* don't understand the issue then because no one is saying that there will be 0 electrical contractors.
Electrical contractors will continue to exist because demand will continue to exist, but the wait time to get the work done will increase due to not enough electrical contractors.
Or the work will be left undone because the owner doesn't have enough money to pay the few electrical contractors that remain.
Or the work will occur but will avoid all regulations because the cost of complying relative to the odds of being caught don't justify paying it.
The tension you may be blind to, is that society wants to maximize safety in an area - and any work done should be in service to that goal, and not an end unto itself. We shouldn't blindly maximize for work done in an area, we have to make sure the result is safe: this introduces rules and regulations, and the time and monetary costs tag along.
No two people will agree where the balance is, but generally there's regional culture. Hell, Texas allows home-owners to do their own electrical work - does that "drive business away" since some people won't pay for small DIY fixes in TX? I can't say I've ever heard that argued, but I hear it deployed a lot in response to regulations.
Half my house was built less-than-safely by the previous owner because getting the permits for the structures would be too expensive, time-consuming, and maybe not even possible.
The increased costs (time and money) of permits really changes the risk-reward.
... what?