David and Goliath, or Why the One Percent Has to Rig the System

Malcolm Gladwell’s bestseller, David and Goliath, asks how and why the weak win far more often than we expect. What characteristics of the weak can sometimes make them strong? What characteristics of the powerful can often make them vulnerable? For a long-time inequality buff like me, Gladwell provides some new insights.

Gladwell tells the story of a girls’ basketball team coached by one of the fathers. The girls were small and not much good at dribbling or shooting. So the father, who had no prior experience with basketball, had his girls engage in a “full court press”, constantly running up and down the length of the court, blocking the opponents. This unorthodox behavior enabled the little girls to win again and again against better trained, taller and stronger teams – much to the resentment of their opponents. But as Gladwell points out, underdog strategies like this are very hard work.

What characterizes successful individual underdogs? A much higher than random number have overcome a traumatic childhood. For example, David Boies overcame severe dyslexia to become a prominent trial attorney. Emil Freireich, who lost both parents as a small child, bucked the medical establishment to develop effective chemotherapy for childhood leukemia.

I know personally two such underdogs: my husband Tom Haines and his daughter Avril. Tom’s father deserted when he was three; shortly afterwards the courts removed him from his mentally ill mother and placed him in an orphanage. He worked his way through high school and City College of New York as a live-in houseboy and baby-sitter. Before even completing his PhD in chemistry, he became an assistant professor at City College, and landed the College’s first NIH grant. Still in his thirties, he founded the Sophie Davis School of Medicine at City College. No conventional medical school, Sophie Davis begins European-style at the undergraduate level, to make it easier for minorities to enter medicine. When Tom’s daughter Avril was eight, her mother developed emphysema. Tom and Avril nursed her until she died when Avril was fifteen. Later, as an attorney, Avril rose rapidly in the U.S. State Department Legal Division, becoming Director of the Treaties Division, moving on to Counsel to the U.S. Senate Foreign Relations Committee, then to several top jobs for President Obama, including a year as Deputy Director of the CIA. A senior law professor at Columbia recently recommended her for the U.S. Supreme Court. She’s still only 47!

What’s with Tom and Avril? Both are supremely self-confident and optimistic, obsessively hard-working, skilled in personal relations, yet ready to buck convention. Did the trauma in their lives help make them this way?

Of course, as Gladwell points out, a rough childhood crushes more people than it empowers. However, oppression of an entire community—Gladwell gives examples of the Catholic communities in Northern Ireland during the Troubles, and the South Vietnamese peasants during the Viet Nam war—such oppression can strengthen resistance. Herein lies a major weakness of the powerful: they easily assume that the weak will give up in the face of overwhelming force. If a little force doesn’t work, just apply more.

Near-death business experiences can empower as well—as I discovered when my first husband took over his dad’s failing small health and beauty aid business. We made and marketed a variety of products, starting with Ezo Denture Cushions to stick in your false teeth and Zip Wax to peel the hair off your legs. We had $7 million annual sales and 30 employees. With my ex as CEO, I wore multiple hats: controller, purchaser, computer programmer, new product designer. It was an exhilarating nightmare: 12 hours a day, seven days a week, panic at payroll time, hours on the phone soothing vendors we had to pay late. Moving from Manhattan to a cheap old warehouse in New Jersey, and cutting back advertising, slowly we dug ourselves out.

But that’s the nature of small business: grueling hard work, over-optimism, constant crises, innovations born of desperation. And that can make small business enormously productive. Consider just one simple statistic: According to the U.S. Census, in the first quarter 2016 businesses with under $25 million in assets generated 48c in sales per dollar of assets, while those with $25 million and over generated only 13.4c, a ratio of 3.35 to one.

So what keeps us small business Davids behind fences? As Joseph Stiglitz points out in his recent book, Rewrite the Rules, over the last forty years the tax system has become much less progressive, monopolists have been given free reign, unions have been busted, the minimum wage hasn’t risen, corporate criminals have gone unpunished. Most significant, the giant banks, fattened by free money from the Federal Reserve Bank, more and more refuse to lend to small business.

So, applying Gladwell’s themes, why does the One Percent need to rig the system against the Ninety-nine Percent? Why can’t the One Percent live happily with the wealth and privilege they already enjoy? Because if they did, the more entrepreneurial members of the Ninety-nine Percent would soon do to them as David did to Goliath.

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