and how would the government determine what is “competence”?
The same testing they do now. It just wouldn’t be mandatory to be in business.
Do you really have to go through Cosmetology school to cut hair? No. But it’s required to open or work in a shop in all states as far as I know.
The issue is, what’s your competence to do the job? If someone is willing to go with your own stated competence, they just assumed all the risk. If the State is saying you passed a test, then in some form they are taking away that risk. Possibly Tort law can reflect that. But you would still be free to choose.