Until 1972, the Olympic gold medal for men’s basketball was always ceded to the US in the manner of a birthright. Top US college teams and amateur players routinely overwhelmed opponents until the USSR upset the US team in that year’s semi final round. Explanations abounded, but it is now clear that foreign programs had caught up, adopting US training methods that we had voluntarily shared with the rest of the world. The hard work of foreign players and the emphasis on team rather than the US one-onone approach, combined with neglect and hubris by the US, were contributing factors.

Fast forward to the present. In less than a generation US teams are no longer prohibitive favorites to win world basketball competitions. An NBA team’s roster is likely to include players from small Eastern European countries, Nigeria, and China, to the great glory of the sport. This is not a reflection of any decline in athleticism of American basketball players, who remain arguably among the most superb athletes of any sport.

And even in our homegrown pastime - baseball - the US will not be represented in at this year’s Summer Olympics. We were eliminated in a qualifying round by previously winless Mexico.

By analogy, the US Jobless Recovery represents an ongoing victory for globalization and offshoring and a loss to the US workforce. My technology firm, which provides highend solutions to corporate and financial clients, has felt offshoring’s impact to the tune of at least $2 million over the past three years. As a result, we have had to downsize even some world-class technologists, a truly painful process. This is not to belly ache; responsibility to manage the challenges clearly rests with us. I also accept that protectionism is no answer for the US economy or our firm.

But it has been tough to take both the continuing certitude (and inaccuracy) of economists’ and policy makers’ predictions of imminent job growth, as well as their dismissive attitudes on the impact of offshoring, as recently as yesterday by Greg Mankiw, Chairman of the Council of Economic Advisors. Twenty-four months into economic recovery, job growth remains absent. And while some economists are beginning to acknowledge that this is more than simply a “lagging indicator” issue, most either don’t get it, or are in denial as to the competitive threat from overseas.

Their explanations indicate a lack of understanding of how work gets done in a globalized economy. Boiled down, these explanations are founded on faith in the historic dominant strength and resiliency of the US economy, its global corporations, its prominent universities, venture capital and Silicon Valley, and US capital markets to provide job growth. All remain true, but the gap with the competition has narrowed.

Last year Treasury Secretary Snow confidently predicted, "...Everything we know about economics indicates that the sort of economic growth expected for next year, 3.8 to 4 2 per cent, will translate into two million new jobs from the third quarter of this year to the third quarter of next year... That’s an average of about 200,000 new jobs a month…What gives me confidence? Everything we know about economics and history…I would stake my reputation on employment growth (200,000 per month) happening before Christmas. I’d bet dollars to doughnuts that we are going to see a pick-up in employment in 2004."

Data from October 2003 through January 2004 consistently failed to meet consensus estimates, and in December stunningly, only 1,000 jobs were created – off by 150X! Apparently we don’t know as much as we thought about economics.

What’s going on? We were assured that once stimulus from the tax cuts took hold, the inherited Clinton recession and job growth would kick in. Uncertainties connected with 9/11, the wars on terrorism and Iraq were variously blamed for lack of capital investment and corporate hiring. But as the uncertainties diminished, the precursors of traditional job growth – GDP growth, corporate profits, sales, growth of temp work - occurred as predicted. Job growth did not.

While experts see this as contradictory, we do not. Divide US jobs into those requiring face-to-face interaction, and those that don’t. Those non face-to-face jobs in corporate America, traditionally well paying and with benefits can be done anywhere. Thus there is a decoupling of job growth from the traditional data points for GDP, corporate sales, profits, capital expenditures and the rising stock market. Corporate profits and capital expenditure will continue to rise, GDP will grow, but the traditional corporate payrolls will not. Nor can we expect otherwise, because corporations can get a better deal offshore!

To argue job creation has occurred - as measured by the alternative household survey - as though there’s been an outbreak of entreprenurialism, is diversionary, specious, and good only for its insult value. Consider the team members we laid off, now independent contractors: In the payroll survey they would appear as a loss, but in the household survey a gain. Some work as temps, pay for their health insurance via Cobra, and at lower compensation. Is this the job creation the experts are projecting?

Initially off-shoring was dismissed as the exporting of low-end job that would free US workers to concentrate on higher value added activities. But offshoring is now embedded in the corporate business model and is rapidly moving up the food chain to include lawyers, accountants, financial analysts, and high-level pharmaceutical and technology researchers. With nearly 2/3 of US jobs at stake, ignoring the current reality and challenge of world-class competition will be yet another failure of intelligence and common sense, resulting in much more than the loss of a gold medal.

*A graduate of Wharton, Ernie is a Founding Partner of Catalytic Group, Inc., a Technology consulting and execution firm. A former banker he enjoys writing on business topics and can be reached at ernie@catalyticgroup.com.