The Fence at Nogales
Quick answer: What does the fence at Nogales show about why nations fail?
Nogales, Arizona, and Nogales, Sonora, share families, climate, and geology, yet households north of the fence earn roughly three times more. Acemoglu and Robinson use it to show prosperity comes from institutions: inclusive ones open the contest to everyone, while extractive ones reserve power and wealth for the few.
Walk the border at Nogales and you can put your hand on an ordinary steel fence running through a single town split in two. The same families live on both sides. Cousins wave across it. The desert, the heat, and the rock are the same. Yet households in Arizona earn roughly three times what households thirty yards south in Sonora earn. The streetlights stay on, police answer calls, and permits aren't for sale. Daron Acemoglu and James Robinson open Why Nations Fail at that fence because it burns away the easy answers. Nature didn't make the difference. People did, choice after choice. They call it inclusive versus extractive institutions: rules that open the contest to newcomers, or rules that keep power with those who already hold it. John is fair about the book's limits. But his warning is plain. Decline rarely looks like a coup. It looks like rules quietly bent toward the powerful while the forms of openness stay on display.
Why it matters for leaders: Prosperity is something people decide to build and must keep deciding to defend; none of it is permanent.
Q: What are inclusive and extractive institutions?
A: Inclusive institutions let people own what they earn, enforce contracts fairly, and remove failed leaders; extractive ones keep those powers thin, for sale, or reserved for the few.
Q: Does John treat the book as beyond criticism?
A: No. He notes its terms blur and critics say it leans on well-chosen anecdotes, but argues the lesson at the fence still stands.
Read the full essay on Substack → https://heroespath.substack.com/p/the-fence-at-nogales
By John Fenzel, founder and CEO of Heroes' Path Foundation