Comparative Advantage

Outsourcing: Pushing the Boundaries

A local publisher in Pasadena, CA pushed the boundaries on outsourcing recently. According to NPR:

Morning Edition, May 11, 2007 · A Web site in Pasadena, Calif., takes outsourcing to a new level. It advertised for a journalist to report on Pasadena's city government and politics, but will base the "local" reporter in India. The publisher says it makes sense, since City Council meetings are available on the Web. The India-based correspondent will be able to e-mail anybody he wants for an interview.

Innovative yes. But is it really a breakthrough that really exploits Ricardo's theory of comparative advantage? I think I might reserve that kind of praise for the new venture called No Worries, Mate (NWM). This venture, founded by an Australian expatriate and Caltech dropout, outsources a hitherto sacrosanct local function.

China, you may recall, became somewhat notorious for its one-child policy. This left many poor Chinese women with the double downer of poverty and unsatisfied maternal instincts.

Meanwhile, back in the US of A, busy career women find that there simply isn't time for both a high-powered career and child rearing. Importing a nanny is costly and fraught with tax and immigration problems.

The Ricardian genius of NWM is that it solves both sets of women's problems simultaneously. For a quite reasonable fee, MSM flies your child to China into the tender (albeit internet video supervised) care a loving foster parent. Home visits are normally semiannual.

For insurance reasons, NWM is not taking children under the age of six weeks.

Ralph Peterston, the CEO, claims that the enterprise is just a slightly updated version of the English Public School.

As an added bonus, your child learns a foreign language!


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