Sharply marked borders—lines that separate two abruptly different styles of life—have always puzzled me. Why should they exist? Diffuse borders seem to be more natural.
This is the case of urban landscapes giving way to the countryside. Buildings become more distant from each other and green spaces become longer and more frequent. In the absence of signs you cannot define where the city ends and the countryside begins. This happens in some borders between countries as well, between Canada and the United States and between some countries in Europe, for example. Maybe there are marked differences between, say, Switzerland and Austria, but standing in their common borders it is almost impossible to tell which country you’re in. If you come from Austria, everything begins to look more Swiss as you approach the border, and the other way around if you come from Switzerland. Even Northern Italy looks a little Swiss, or Austrian.
Then there are sharply marked borders, which appear unexpectedly without any warning of an approaching transition, and not only between countries. I remember, for example, 14th Street NW in Washington, D.C. in the 1980s. At the time, the street marked the border between the perfectly safe downtown area and the dangerous zone that bordered the Capitol. Yet approaching 14th street from the downtown side did not lead you into a progressively dangerous area. Conversely, approaching it from the Capitol side did not take you into an increasingly safer zone. It was not like that. It was an abrupt border between two homogeneous areas, uniformly safe on the one side, unvaryingly dangerous on the other, without any gradation.
I always wondered why metastasis did not exist in this environment. Why did danger respect a geographic line and not spread on the other side of it? And, also, why didn’t security invade the other side of the line? There are many examples of these kind of urban borders in which a wrong turn from a safe street suddenly puts you in an extremely unsafe place.
This is the kind of border that exists between Mexico and the United States.
If we could understand why this border is so sharply marked, we would understand why some countries develop and become rich while others remain poor and violent. We would know which are the elements that give shape to the bordering societies, and which others are just accessory—making for a difference but not a sharp break.
Nogales: a city in two countries
Daron Acemoglu and James A. Robinson addressed this issue in their recent bestseller Why Nations Fail. They start with a comparison between Nogales, Arizona, and Nogales, Sonora—two halves of the same city, one in the United States and the other in Mexico. The income of the average household in the Arizona half is $30,000 a year, that of the other half is $10,000 a year.
North of the border, “people can go about their daily activities without fear for life or safety and not constantly afraid of theft, expropriation, or other things that might jeopardize their investments in their businesses and houses.” Also on the northern side, people take for granted the provision of “electricity, telephones, a sewage system, public health, a road network linking them to other cities in the area and to the rest of the United States, and, last but not least, law and order.”
In contrast, “Most adults in Sonora do not have a high school degree and many teenagers are not in school. Mothers have to worry about high rates of infant mortality…Roads are in bad condition…Law and order is in worse condition. Crime is high and opening a business is a risky activity. Residents of Nogales, Sonora, live with politicians’ corruption and ineptitude everyday.” The border is so marked that you can walk thousands of miles to the south and you will find social conditions similar to those of Nogales, Sonora, while you only have to walk a few meters north to find the totally different conditions of Nogales, Arizona. The border does not connect. It separates two completely different societies.
The differences that set the two Nogales apart are the more striking because, as the authors note, the backgrounds of people on both sides are similar—“they share ancestors, enjoy the same food and the same music, and, we would hazard to say, have the same ‘culture.’” Yet, the differences exist, and not just with Nogales, Sonora, but with all other countries south of the border.
Acemoglu and Robinson attribute the differences to the access that the northern Nogales citizens’ have to the United States economic and political institutions while “those of Nogales, Sonora are not so lucky. They live in a different world shaped by different institutions.”
This idea, that countries develop or not in accordance with the quality of their institutions is not new. Douglas North won a Nobel Prize in 1993, two decades before Acemoglu and Robinson wrote their book, arguing that economic development comes to societies that put in place inclusive institutions—that is, institutions that promote the well-being of all members of society rather than that of only a small group. But the idea is much older than North. The interconnection between institutions and behavior has been recognized for centuries and has been the main axis of the development of political science. It was just the economists who didn’t know that.
In any case, the institutional explanation is the most commonly accepted in the academic and not-so-academic circles concerned with development. Multilateral institutions like the World Bank, the Inter-American Development Bank and similar concerns dedicate much of their efforts to create institutions in the developing countries, believing that, in this way, people will learn to behave in ways that promote their own development.
But this theory, unfortunately, is empty.
How institutions become a lie
Saying that the behavior of societies depends on the shape of its institutions does not answer why some countries develop while others do not. It only changes the question into, “Why did the former create better institutions of higher quality than the latter?” The emptiness of this theory is easily perceived by looking at the response of the Middle Eastern societies to the attempts to help their development by introducing modern institutions in their midst. Institutions are routines that societies establish to deal with challenges—how to decide on who will govern the country, how to deal with crimes, how to organize production and apportion wealth, in accordance with existing values and behavior. If values and behavior in a society are like those of Sicily, it will develop a Cosa Nostra—an old and very strong institution with very clear rules and procedures—and not a Westminster-like parliamentary regime. Certainly, institutions determine behavior, but most importantly, values and behavior create institutions.
The idea that just changing institutions can change behavior gives the impression that if only the Sicilians copied the British institutions they would begin behaving like Londoners and the mafia would disappear. Also, that if only the Mexicans and other Latin Americans copied the United States’ institutions they would start developing fast. This impression is false because it ignores the fact that there has never been a lack of well-designed institutions in Latin America, including excellent constitutions and many good secondary laws. Moreover, the American constitution was one of the models used by Latin American countries to design their own institutional setting.
The problem is that by imposing a set of institutions that did not correspond with the values and behavior of the people they were imposed on, a deep gap developed between these two dimensions of the Latin Americans’ lives. They created two kinds of institutions—the imaginary ones, which are written in the books of laws, and the real ones, which are not written anywhere but rule their lives.
Thus, the written laws and constitutions are not applied, or are applied only to the weak while the powerful live on privileges that exist well beyond the rule of law. In this way, formal institutions became a lie. People accept the lie and conduct their lives in accordance with other, unwritten institutions that have framed their lives for centuries on end. What frames their behavior is a set of under-the-table institutions, not officially recognized but effectively functional in their channeling of their societies’ activities.
There is one similitude and two differences between the people living across the border from each other in Nogales. The similitude is that both sets of people live under institutions that they choose to guide their behavior and their judgment of the behavior of others. One difference is that in the case of the north, people live according to the official institutions they say guide their life, while in the south they pay only lip service to the official institutions while they frame their actions through a different, hidden but effective institutional setting. The other difference is that the southern behavior and values that shape the real southern institutions are not conducive to progress, while the behavior and values of the northern people are conducive to it. The problem is in the real behavior and values, not in the institutions, which are only consequences of them.
That is, the difference is much deeper than the institutions. It is inside the people.
The power of the people
Just changing the diagnosis in this way turns around the perception of the problem of Nogales, Sonora, and the whole of Latin America. It is not that their institutions are too weak. The real, though hidden Latin American institutions are too strongly embedded in the behavior of the Latin American population. They are as strong as those in the northern part of Nogales and they are manifest in the daily lives of Latin Americans.
Latin Americans have had plenty of time in their two centuries of independence to change their institutions to become more inclusive, or efficient, or whatever they could have wanted to have done. In fact, they have changed their institutions to accommodate their own changes and those of the external world. But these changes have been functional predominantly in the under-the-table set. The difference between that effective set and the official ones has remained in place and in many cases it has just increased as societies evolved from agrarian and rural to urban and industrial.
Changing this state of affairs would not be easy. Just imposing new institutions on top of Latin American societies would only increase the number of false institutions that are there only to be paid lip service. What needs to be changed to spur development is the values and behavior of the individuals. If you don’t do this, the individuals will continue to bypass the formal institutions.
And, if you don’t do this, the border will remain sharp, separating two parts of the continent with different values and behavior, and with widely different results for their efforts to develop.