Borders, Laws, and Prosperity: Why North and Latin America Differ
A different kind of episode — exploring why some countries prosper while others struggle, through the lens of institutions and rule of law.
This episode is a departure from our usual tech and AI topics, but it's a conversation I've been wanting to have for a long time.
The Question
Why is the United States wealthy while many Latin American countries — with similar natural resources, similar histories of colonization, and similar geographic advantages — struggle economically?
It's a question I think about a lot, given my background. And the answers are more nuanced than most people think.
Institutions Matter
The biggest factor isn't geography, resources, or culture. It's institutions. The rules of the game — property rights, contract enforcement, political accountability, fair courts — determine whether a country prospers or stagnates.
Countries where you can start a business without bribing an official, where contracts are enforced by courts, and where your property can't be seized arbitrarily — those countries grow. Countries where those things are uncertain — they don't.
The Colonial Legacy
The type of colonization matters enormously. In North America, colonizers built institutions for settlement — they were staying, so they needed working systems. In much of Latin America, colonizers built institutions for extraction — take the wealth, send it home. Those extractive institutions persisted long after independence.
Why This Matters for Business
If you're building a business — especially one that serves international markets — understanding institutional frameworks changes how you approach different markets. Payment systems, contract structures, customer expectations, regulatory environments — they all vary based on institutional context.
This isn't a political episode. It's an exploration of why things are the way they are, and what we can learn from it. Watch the full conversation for the deeper discussion.