simply shrinking the market doesn't radically change things,
The market doesn't shrink. The market is the number of exchanged goods. The market doesn't care if there are 200 merchants or 250 merchants. What changes is the distribution of goods and merchants, and when the number of merchants is very low and their concentration of market power high, we get into situations (oligopoly, monopoly) that we do not want because we know they are bad.
If you want a book that isn't in the bestsellers list, then in your local town there's probably only one or two book shops that stock it at best and most likely none.
For the past 20 years, when I go to a bookstore and I want a book they don't have, they could almost always order it and have it for me the next day.
while it'd be nice to have geographically distributed demand for labour, in practice this has not been true since the invention of cities.
I'm not talking about a perfect equilibrium. I'm talking about the simple fact that if your country has one region with 50% unemployment rates and one region where employers can't find workers, your whole country will destabilze.
Of course there will always be differences. But if they get too extreme, the consequences are much higher and much more expensive then the costs of some small interventions.
What's more once you decide that lots of people deserve to be protected from changing times,
I never said anything like that and my arguments are completely unrelated to technical or other progress. So please burn the strawman somewhere else.