You lose out on candidates who work at companies that don't let them show you their current code, and have a home life that occupies their time outside of work.

So, you can ask to see candidate's existing code if you work at a small enough shop and/or don't care about missing out on candidates who don't have shareable code. But if you are trying to hire at a larger scale, it does not work.

Many great hiring schemes work until a certain scale and then they fall apart. Some hiring schemes also severely tilt your candidate pool towards a certain subset of the population. I'm sure whiteboard style interviewing also has similar issues.