While running for president, former Secretary of State Hillary Clinton published a position paper outlining how, if elected, she would make it easier to start a small business. One of her proposals was: Any state and locality willing to make starting\ a business cheaper and easier and meaningfully streamline unnecessary licensing programs will receive federal funding to support innovative programs and offset forgone licensing revenue.

a. Why might this proposal be expected to increase the rate at which small businesses are formed?

b. Given your answer to part (a), why did state and local governments pass such licensing requirements in the first place?