His name was E. F. Schumacher and his book was Small is Beautiful. The book helped revolutionize how a whole generation of people thought about the connections between work, scale, technology, ecology and economics.

The main thrust of Small is Beautiful is that in our rush to capitalize on the efficiencies of technology, we wind up creating businesses that operate on too large a scale. The same economic systems that are incredibly efficient and cost-effective from a business standpoint turn out to be wildly inappropriate for the human beings who work in them. Schumacher subtitled his book: “Economics as if People Mattered.”

Schumacher was born and educated in Germany, then left for Britain as a Rhodes scholar, and Columbia University in New York to study economics. He resettled in England to avoid life under the Nazis, and, after the war, worked for the British Control Commission on the rebuilding of the German economy.

Schumacher served as the Chief Economic Advisor to the British National Coal Board from 1950-1970. So he spent most of his working life helping manage one of the world’s biggest enterprises – a mammoth organization with more than 800,000 employees. That he wound up creating a gospel of small-scale economics is, I suppose, just one of life’s delicious ironies.

During this time, Schumacher was asked to consult on overseas development projects. It was that work that shaped his thinking about the importance of building economies on a more human scale. While traveling through Burma, he realized that “impoverished” village economies were far richer than the official GNP statistics showed. The exchange of locally-produced goods and services often goes unreported, just as labor donated to a communal barn-raising doesn’t appear anywhere in economic reports. Moreover, Schumacher noted, official statistics cannot measure the degree of security and well-being that such mutual assistance brings to village life.

On a trip to India, Schumacher came across the brick factory project that synthesized his thinking about development done at the wrong scale. The factory was modeled on English brickworks, which meant that it was highly automated and operated at huge capacity. Those who took jobs in the factory might make better wages, but they would live a far poorer life, separated from the support-rich environment of their villages.

In a flash of insight, Schumacher saw that it was the economic thinking that led to the factory that was the real problem. It would be far better to have a low-tech brick works in every village than a single factory that out-produced them all. He badgered friends in Britain until they designed a made-by-hand production system for bricks that was scaled to a small village and its local economy.

Contrast the life of the factory worker who does nothing but feed brick-making machines with the life of the owner/manager of the local brick works. This villager is not just a worker but an artisan, skilled in designing and making bricks, and so his work life is more nurturing and rewarding. The inefficiency of his technology is overcome by a short supply chain and lower costs of doing business. The success of the brick works likely brings greater prosperity to the entire village. His life is enveloped by a small eco-system of kinship and mutual caring and collaboration.

The brick factory, on the other hand, generates large gross profits because of its efficiencies of scale. But those profits are mostly bled off to support those who build and maintain the big factory and its lengthy supply and distribution chains – investors, CEOs, other executives, and the bevy of bankers, lawyers, accountants, consultants, and technologists that large-scale systems require. Little remains for the workers who toil inside the factory.

Fritz Schumacher died in 1977. Had he lived, he would have warned us about economies that are long on “business” efficiencies, and short on human benefit. When we hitched our economic wagons first to the national and then to the global economy, we unknowingly swapped the security and richness of local markets for the vagaries of life in the worldwide brick factory. Schumacher saw that coming.

Reinventing the overcooked economies of our world is going to be very daunting, but we have little choice. Life in the brick factory is brutish and nasty and inhuman, no matter how profitable it may be. Our challenge is to rescue ourselves from the endless cycles of production and consumption on which modern economies are built.

As Schumacher once wrote, “A Buddhist economist would consider this approach excessively irrational: since consumption is merely a means to human well-being, the aim should be to obtain the maximum of well-being with the minimum of consumption..”

In the end, he got it right: Small is much more beautiful.

You may recall that Carlos was the most feared terrorist and assassin in the world – a man so famous that he was recognized everywhere by just his first name. After two decades of political assassinations, Carlos was convicted by a French court in 1997 and sentenced to life in prison.

In the meantime, here in America, there’s a whole cadre of political assassins who are every bit as lethal as Carlos was. Instead of killing people, these folks are hired to kill off political campaigns and political careers, which in politics usually amounts to the same thing. Their weapons are smarmy political ads that are often as deadly as anything Carlos ever dished out. But unlike the Jackal, these stalwarts get fame, fortune, and a place of honor in the current political firmament.

Take Larry McCarthy, the current king of negative advertising for the GOP. McCarthy is best known for the “Willie Horton” ad that pretty much sunk the presidential hopes of Massachusetts Governor Michael Dukakis in 1988. The ad raised a firestorm of criticism from both sides of the political aisle because of its overt fear-mongering and racial overtones. But that didn’t matter much. The ad went totally viral because of the controversy, and the Dukakis campaign never regained the momentum it lost.

McCarthy’s career is dotted with campaign ads that are powerful and effective but hardly truthful. Politicos know that it is easier to motivate voters with negative messages than with positive ones. And if these ads are overly simplistic, short on truth, or even deliberately deceitful, well, the sad truth is that they work.

McCarthy’s media company does the advertising for Restore Our Future, the pro-Romney Super-PAC. Restore Our Future is not only outspending all of Romney’s opponents, it’s outspending the “official” Romney campaign as well. And the ROF coffers never run dry, thanks to the Supreme Court ruling that allows unlimited donations to Super-PACS.

Hitmen like McCarthy earn money from consulting, from ad production, and a percentage of their campaign’s advertising “spend.”  According to Jane Mayer’s recent New Yorker article, top guns like McCarthy take in millions of dollars each year. This year, his services are much in demand. Mayer quotes former Senator Gary Hart on McCarthy’s popularity, “If you want an assassination, you hire one of the best marksmen in history.”

Almost everyone on the inside of campaigns loves the new system of unlimited money and attack politics. Candidates love to let their friendly Super-PACS do the dirty work, while they stand by and deny any responsibility for negative campaigning.

Big donors are ecstatic that the money gloves are off. The Think Progress website reports that, in January alone, 19 donors gave almost $47 million to Super-PACS supporting the Republican presidential candidates. Donations directly to candidates on the other hand are limited to $5000 per person. So, it would take 18,000 maximum campaign donations just to match the Super-PAC donations from those 19 individuals.

Limitless fundraising means unlimited access for those who can afford to play. Money has always bought access in politics. Super-money buys super-access.

Of course, there are some losers. Candidates who either can’t raise money from big donors, or don’t want to, are in danger of being spent to death by Super-PACs. That’s what happened to local candidates in North Carolina in 2010.

And then there’s the process itself. Each election cycle seems a bit more meaningless than the one that came before. The biggest problems we face go unresolved – how to reduce the deficit in a way that does the least damage to our wellbeing and our future; how to reverse the economic inequality that threatens to tear the country in two; how to transition out of a wasteful and unaffordable healthcare system; how to extract ourselves from wars that we have no business fighting; how to restore good faith to our political system before a lack of civility sinks it for good.

Here’s a chilling analysis from longtime political pollster Peter Hart, taken from Mayer’s article: ”It’s not just tougher out there. It’s become a situation where the contest is how much you can destroy the system, rather than how much you can make it work. It makes no difference if you have a ‘D’ or an ‘R’ after your name. There’s no sense that this is about democracy, and after the election you have to work together, and knit the country together. The people in the game now just think to the first Tuesday in November, and not a day beyond it.”

Politics is a lot like warfare. If there are no boundaries to bad behavior, it will always be easier to make more war than it is to make peace. Ask Carlos the Jackal.

Facebook owes its success to the affection and loyalty of some 720 million ordinary people around the world who are Facebook fans. So it seems very ironic that Facebook’s stock offering is about to create truly extraordinary wealth for a tiny cadre of company insiders and Wall Street bankers and investors.

The Facebook IPO will be a classic Wall Street capital-raising operation, which means that all the usual players will get their piece. The public offering will be “managed” by a consortium of investment banking firms, led by Morgan Stanley, Goldman Sachs, and other leading Wall Street banks. For their efforts, these banks will split a fee that industry experts say will be at least $50-75 million and may be considerably higher. That’s not bad pay for a couple of months work, even by swollen Wall Street standards.

You may wonder what the banks do to earn that kind of payday. The usual answer is that they “make the market.” That’s Wall Street talk for making sure that the offering is completely sold out in advance with lots of buying demand left over.

Now if you were trying to peddle the stock of some fifth-rate company with a dodgy history and questionable prospects, you can see why you might need all these investment bankers. It would be up to them to scrounge up enough buyers and call in all their favors to make sure that Dodgy Company stock didn’t tank right out of the box. So the execs at Dodgy would be happy to pay a hefty price for bankers to “make a market.”

But Facebook is such a hot property that one could imagine raising $5 billion just by listing the shares on eBay, or better yet auctioning them off on Facebook. That way, the company could save a hundred million or so in underwriting fees, and also give their loyal fans a piece of the action. Alas, the Securities and Exchange Commission frowns on such methods. Besides, for Facebook, it’s just part of the price of joining the Wall Street Club.

Building the Buying Fever
The other part of “making the market” is setting a price that encourages a bit of buying fever. When trading begins, underwriters want lots of hungry buyers on hand to bid up the price.

This low price strategy has another advantage. It also gives Wall Street favorites a chance to nab some quick profits on the stock. Allocating scarce IPO shares is the industry’s way of rewarding its most important customers by letting them in on the deal.

For example, if Facebook comes out at $50 a share, all those waiting buyers might take the price to $60 or $70 a share. In that case, those who got the original IPO shares will be sitting on a 20% to 40% instant profit. If the stock price eventually fades, most of them will have taken their profits and been long gone. If you wonder how big money begets more big money on Wall Street, this is one of the ways.

But it’s the Facebook company insiders who will enjoy the biggest payday. Founder Mark Zuckerberg, who owns 24% of the company’s stock, will be worth somewhere between twenty and twenty-four billion dollars. Former FB partner Dustin Moskovitz will be worth a tidy $7 billion. Facebook COO Sheryl Sandberg will own $1.6 billion in stock to go with her $30 million a year salary. Peter Thiel, Facebook’s first investor way back in 2004, will see his original $500,000 bet mushroom to $2.7 billion.

There is something profoundly wrong with the American capital formation system. At this end of the spectrum, it capriciously creates a new class of billionaires. At the other end it starves out the small businesses that are responsible for most of the new job creation in America.

Worse yet, Facebook as a company doesn’t even need the money. Even with its thirty million dollar-a-year extravaganza salaries, it still earned a billion dollars in profits last year, far more than it needs to feed its own growth. No, this stock offering is meant to certify that another crop of dot-commers and their patrons have joined the ranks of the world’s wealthiest people.

Occupy America had at least one thing right when it declared that there is one economic system in America for the one-percenters, and another for the rest of us. The Facebook IPO is just the latest sign of how true that is.

As the daughter of Irish immigrants, she was born into a family and culture of working class poverty. She was literate but otherwise poorly educated. She married young, lost one child and raised five others, including my mother, who was her youngest. Grandma helped support her family first by working as a laundress for a wealthy Park Avenue family, and later by running a boardinghouse on the West Side of Manhattan.

My grandmother’s life was very tightly circumscribed – her family, relatives, neighbors, the Catholic Church, and the endless struggle of the poor to stay alive, stay employed, stave off illness, and educate their children in the hope that they would have a safer and better life.

When you grow up as she did, the world must have seemed fixed rather than fluid. If the world was divided up into a few rich people and a lot of poor people, well, that was simply the natural order of things, just “the way things were.”

If most of the decisions that affected your life were made by your husband, your priest, your doctor, your boss, your landlord, your bank manager, or your local Congressman, well, that too was the natural order of things. My grandmother’s life was bounded in most ways by the decisions of others.

My parents came of age and were married during the Great Depression. For much of their life together, they endured the same financial insecurity and lack of power that marked my grandmother’s generation.

A Different America
But we live in a vastly different America and a vastly different world. Tens of millions of blue-collar kids have been to college, often away from home for the first time. Travel has given us firsthand knowledge of the diversity that exists on the planet. Sixty years of television has opened a panoramic window on the world, and opened us up as well. Nowadays, we skate right through the old cultural and class walls that so partitioned the 20^th century world.

For my grandparents, and even my parents, the worlds of business, finance, Wall Street, and wealth-creation must have seemed like some mysterious “black box,” whose inner workings were simply beyond their ken.

But with knowledge comes transparency. A couple of years of financial scandal opened our eyes, for instance, about how the folks on Wall Street really make their living. We used to think that it was about minding the economy and keeping businesses strong and healthy. It turns out that what they mostly do is find ever more interesting ways to make ever larger sums of money, for themselves and for other big investors.

Hedge funds earn billions of dollars every year for their managers and ultra-wealthy clients, but have great difficulty explaining what value they contribute to the world in return. (You’d be a little tongue-tied too if you had to explain the social contribution of derivatives trading or computer-driven arbitrage.)

And we know too that Wall Street investment banks played both sides against the middle in the now infamous trading of subprime mortgage bonds that almost ruined several economies, including our own.

Meritocracy Matters
Still, with all of the recent scandals and outrages, Americans remain committed to the ideal of the meritocracy – that is, if you make a big contribution, you ought to reap a big reward. Perhaps the most cherished of all the American myths is the Horatio Alger story:  In America, anybody can make it to the top, regardless of where they started. And the corollary to that is: “If you earned it, you get to keep it.”

At the same time, the “cloud of unknowing” that used to protect extreme wealth-making from scrutiny has almost disappeared. Most Americans can now see that the record-setting profits earned by US global companies in the last ten years were generated mostly by sandbagging American jobs.

Most of us are savvy enough to understand that the pressures of the global marketplace may have made those job losses inevitable. But we also know that those same job losses are also funding obscene compensation packages and soaring capital returns for owners of capital. That is hardly the meritocracy we cherish.

Former president Bill Clinton was famous for his ability to convince voters that he “shared their pain.” There’s a worrisome wave coming for the wealthy in America. Most of us no longer believe that the folks at the top share our pain. But we sure do think that they should.

If my grandmother were here, she might think of it as just “the natural order of things.”

For the next ten years, I immersed myself in the nuts and bolts of the New York City political system, first as a street-level campaign volunteer and then as an elected member of the Democratic Party hierarchy and leader of the Party’s operations in my community.

I got to participate in what was left of the old neighborhood clubhouse system that had managed politics in New York for more than a century, going back to the days of the infamous Tammany Hall. Neighborhood political power was the residue of generations of social service and small favors to the immigrant and working class neighborhoods of New York. Everyone knew someone who had been helped out in a time of need by the local political club. Everyone knew that one day they might be in need themselves. The quid pro quo for all that service was strict political loyalty – an obligation to show up on Election Day and vote for the local Club’s choices.

These neighborhood clubs were in turn knit together into County organizations, each headed by a very powerful County Leader. What gave them Ruling Elite power was their control over the Primary Election process. In the days before television and direct mail campaigning, it was almost impossible to run for office without the support of the local party machine. In fact, it was near impossible to even get your name on the ballot. New York was famous for its byzantine election laws, which were specifically designed to stymie insurgent candidacies.

This system of party control existed in both the Republican and Democratic Parties. So, well into the 1970s, the choice of Mayors, Governors, US Senators, Congress, and city and state legislatures in New York was determined almost entirely by the County Leaders of the two major parties. Voters were free to “elect” their favorite candidate in the general election, but it was the Party leaders on both sides who decided who those candidates would be.

The Breakup of the Party Machines
There were a number of factors that caused the breakup of the old political machines.

First, the rapid rise of the Middle Class undermined the historic allegiance between the working class and the Democratic Party. (It became a truism among those of us who worked in politics that staunch Democrats who moved to the suburbs quickly became staunch Republicans.)

Second, the 1960s and 1970s saw the sharp rise of “cause” politics – civil rights, the anti-war movement, and women’s rights. Those issues offered a powerful platform against “the establishment,” including the old party organizations. So, in a certain sense, “the times” turned against the old hierarchies of political power.

Third, television moved politics out of the streets and out of local neighborhoods, and into living rooms instead. For the first time, political candidates could go “over the heads” of the parties and directly to the voters. Candidates were no longer reliant on party bosses to “bless” their candidacies. The party machines quickly lost their ability to dominate the process.

The last blow to the old system was delivered by the concurrent arrival of big money and negative campaigning. Politics used to be mostly a neighborhood and communal process that was facilitated by the old party structures. It is now almost entirely a personal process that is facilitated by truly scandalous amounts of money.

There is not much sign that we are any better off than we were fifty years ago, before the breakup of the old institutions began in earnest. The collapse of old structures is generally followed by an extended period of chaos, as we try on a succession of new ideas and new costumes, hoping to find the right and lasting fit. (I guess it should not surprise us that we do change on the societal level in much the same way that we do it on the personal level.)

I think the same factors that revolutionized politics were at work in business as well – the slow erosion of the old order; the rise of a new class of entrepreneurs with outsized personal aspirations and agendas; an explosion of diversity; and the corrosive effects of a money-driven system.

So we have largely rid ourselves of the old ruling elites, in politics, business, religion and almost anywhere else we look across the society. And it seems true that we live freer and more choice-filled lives. But, in this moment, it hardly seems like a better life.

That realization is probably the surest sign that, wherever we are headed, we are not quite there yet.

Still, the sky always seems darkest just before the dawn. There are signs that William Butler Yeats’ promised Second Coming is nearer than we think.

Turning and turning in the widening gyre/ The falcon cannot hear the falconer/ Things fall apart; the centre cannot hold/ Mere anarchy is loosed upon the world/ The blood-dimmed tide is loosed, and everywhere/ The ceremony of innocence is drowned/ The best lack all conviction, while the worst/ Are full of passionate intensity.

Yeats wrote those words in 1919, in the aftermath of The Great War, when it must have seemed that the whole world had lost its way. Americans have been spoiled because in our lifetime war has taken place “over there” instead of “over here.”  We know little of what it is like to watch the structures and institutions that provide order and meaning disintegrate overnight.

And yet, it may be just as hard to experience the slow death of institutions that we have grown up with and grown fond of – a political system that lifted our aspirations and our sense of national pride; a business community that we could entrust with our material wellbeing and our sense of worth in the world; a government that seemed to work for each of us and all of us all at the same time.

It seems fair to say that life in America is a good deal harder and meaner than it used to be. Our institutions have lost their sheen of benevolence and most of our good will. If we are to make it right again, it would help to know how and why it went wrong. An article from New Yorker columnist George Packer offers a big head start.

The Old Ruling Elite
Packer has penned a brilliant piece in the latest edition of Foreign Affairs (http://fam.ag/raulXS) on the demise of what he calls the Ruling Elite in America. Here is how he describes their role:

“At the same time, the country’s elites were playing a role that today is almost unrecognizable. They actually saw themselves as custodians of national institutions and interests. The heads of banks, corporations, universities, law firms, foundations, and media companies were neither more nor less venal, meretricious, and greedy than their counterparts today. But they rose to the top in a culture that put a brake on these traits and certainly did not glorify them…(They) did not act on behalf of a single, highly privileged point of view—that of the rich. Rather, they rose above the country’s conflicting interests and tried to unite them into an overarching idea of the national interest.”

I remember that world from when I was young. It was orderly, well-managed, hierarchical, and very autocratic. America was at the zenith of its worldwide power and influence. The changes of the 1960s and 1970s that would rock the foundations were yet to come. America the country felt much like a vast corporation that was closely held and tightly-managed by an all-powerful Board – what Packer calls the Ruling Elite.

Of course, it wasn’t terribly democratic. And it wasn’t exactly government “of the people, by the people, and for the people” either. It was an aristocracy of the elite with a public veneer of democracy. Although we got to vote for elected officials, the people we got to pick from had already been selected in advance. So mostly, we got to ratify choices that the Ruling Elite had already made.

But, so long as the ruling elite consensus held, it worked really well. Government functioned, business prospered, and wealth was increasingly shared. The country moved slowly towards a kind of single class society, but with enough variation to honor the uniquely American belief in moving up and moving out.

So what happened? Well, of course, the times changed, and the world changed. But mostly we changed. We wanted a lot more choice and a lot more personal power in our lives than the old system could afford us. So we set about dismantling the old elite power structures. To our great surprise, “power to the people” turned out to be way more doable than we ever dreamed.

But here’s what we never saw coming – the possibility that we might dump the old structures before we could find their right replacements. Having a governing consensus from the top down requires control by a benevolent elite. We are not up for that anymore, and neither are they. And building a governing consensus from the bottom up requires brand new mechanisms that we have only barely begun to put in place. So, out with the old, and oops – not quite ready with the new.

That “oops” should tell us two things. First, for the short term we had better be prepared for a lot of governing chaos but not a lot of good governance. Institutions reflect the consciousness that created them, and running old institutions with a new consciousness never really works. And second, we have to shorten up our sights. Building a governing consensus from the bottom up is almost by definition a purely local endeavor.

If Yeats’ Second Coming is really coming, it will emerge down here with us, and not up there with the “them” in Washington and New York.

If he is correct, it means that the current war against spending and economic investment  in Washington, DC will have two drastic effects. First, it will prolong our economic stagnation and suffering. Second, it will delay the profound changes that are necessary to put our economy back on a growth path.
Here’s the gist of his case. In the early 1900s, the US economy was largely farm and food-based. More than 20% of all American workers were employed on farms. But by the 1920s, farming was in the midst of a grand shift in food-growing technology. Stiglitz describes it this way:

“In 1900, it took a large portion of the U.S. population to produce enough food for the country as a whole. Then came a revolution in agriculture that would gain pace throughout the century—better seeds, better fertilizer, better farming practices, along with widespread mechanization. Today, 2 percent of Americans produce more food than we can consume.”

That productivity revolution rocked American farming in the 1920s. As productivity went up, food prices went down. As food prices dropped, farmers mechanized further to increase crops, adding to the downward spiral of prices and income. By 1932, according to Stiglitz, typical farm worker income had dropped by anywhere from one-third to two-thirds. That caused a slump in demand for manufactured goods, so plants began to lay off workers. Income and demand dropped again. A shortfall of tax collections led to layoffs for state and local government workers. Each downward step fueled the next. By the end of 1932, 23% of the working population had no jobs. As government red ink mounted, deficit hawks of the day called for drastic spending cutbacks.

Doesn’t all of this sound a bit familiar? Stiglitz suggests that all we have to do is substitute manufacturing for agriculture, and we will see that the same patterns have been unfolding in our economy over last two decades. Productivity gains outrun demand and manufacturing jobs shrink. Outsourcing shrinks jobs even further. Increased competition for scarce jobs lowers pay. Lower incomes mean less consumer spending, which further depresses the economy.

In the 1930s, millions of farmers lost their jobs and their livelihood. Because of the dried-up Depression economy, they could not migrate to the industrial cities to find new jobs in manufacturing. They found themselves trapped in the small towns on the plains with nowhere to go.

Today, workers in US manufacturing find themselves similarly trapped, victims first of vast productivity increases and then of the shift of manufacturing jobs overseas. Like the depression-era farmers, many of them will never find significant employment again.

Most economists agree that it took World War II to pull America out of the Great Depression. In order to defeat Japan and Germany, America built a world class manufacturing economy on the fly. All this was paid for by deficit spending for the war effort. After the war ended, millions of soldiers came home and were given free educations so that they could take full part in the country’s booming economy. That, too, was paid for by the government.

Stiglitz argues that something akin to government wartime spending is needed once more to facilitate the shift to a post-industrial economy. Manufacturing employment has bottomed-out in the same way that farm employment bottomed-out 80 years ago. US manufacturing at its peak employed one out of every three workers. Today, that number is less than one out of ten.

Whether Stiglitz’s gloomiest predictions are accurate is not entirely the point. We have always looked to government to provide the “stimulus” needed to kick-start new technologies and new industries.

Given the current political climate in Washington, there is zero chance that the government will undertake what would amount to a Marshall Plan-scale of investment in the Post-Industrial economy. If we are going to allow our investment in solar technology to be “spooked” by one bad loan, for example, where will we find the courage to step up to what the future requires of us? Where will our new jobs come from, and how will we generate the R&D and capital investment needed to grow them?

We could look to corporate America, except that big business is already sitting on the largest accumulation of cash in history, and shows no signs of willingness to make investments that are not tied to short-term returns, or that entail higher risk. (The Wall Street Journal reported in September 2011 that American non-financial companies were “hoarding” more than $2 trillion in cash and other liquid assets. And that does not even include the extraordinary amount of cash piling up in overseas subsidiaries.)

Balanced budgets and payroll tax cuts have their place, but they hardly amount to a serious strategy to create the economy of the future. If we follow “Do-Nothing” economic policies, it shouldn’t be a big surprise if we end up with a “Do-Nothing” economy.

And yet, our lives are often filled with chance occurrences, fortuitous encounters, or unlucky twists of fate that heavily influence success or failure. This is not to denigrate the role of knowledge, experience, courage, and skill. Being lucky usually won’t bring success if you don’t have the other prerequisites. But the opposite is true more often than we think – lots of people may hold the prerequisites, but good fortune often chooses the winners.

Let me offer an example from my own life.

In 1972, I decided to run for political office in New York City. I was too naïve to realize just how crazy a decision that was. My opponent was a popular incumbent, well-known and well-respected in the community. He headed the established political club in the neighborhood, while mine was a virtual unknown. His campaign infrastructure was large; mine consisted of three other people and myself. If he had to, he could have outspent me many times over.

Professional politicians have a name for this kind of lopsided race: they call it a “suicide run.”

Fortune, however, smiled on me. Several weeks into the race, my opponent was nominated for a judgeship, and he immediately stepped down from the race. His successor was picked not for his political skills, but for his years of loyal service.

In the days before television advertising and high-priced direct mail campaigns, local campaigns could be won “in the streets,” as we used to say. I had a gift for street campaigning, and my opponent did not. I won by less than 100 votes out of almost 2500 cast.

Was I a good candidate? I was a great candidate. Did I outwork my opponent? You bet. Was our campaign smarter and more effective than theirs? It sure was. Could I have won without that judgeship? Not in a New York minute.

Though I did not fully realize it at the time – I was way too busy being full of myself – my political career was launched by pure chance.

How Chance Intervenes
Few things in life are chancier than being adopted. Steve Jobs was adopted and raised in Palo Alto, California – just about Ground Zero for the technology culture that so inspired him growing up. What if his adoptive parents were from Napa Valley instead of Silicon Valley? There would almost certainly never have been an Apple Computer. And it would have been left to someone besides Steve Jobs to transform both consumer technology and the way we run our lives.

In his book, Outliers, Malcolm Gladwell cites dozens of examples of how chance intervenes in startling ways that we rarely realize or talk about.

In the eighth grade, Gladwell writes, Bill Gates and some of his friends, through a special connection, were granted virtually unlimited online access to computers at the University of Washington campus. It was an astonishing gift, and the young Gates took full advantage. School for Gates became just a sideline. His real life was computer programming. That first piece of good fortune was followed by others – paid programming gigs, access to programming mentors, exposure to higher-level skills.

By the time he dropped out of Harvard to start Microsoft, Gates estimates that he had already accumulated more than 10,000 hours of programming experience. Here is how he explains his later success: “I had a better exposure to software development at a young age than I think anyone did in that period of time, and all because of an incredibly lucky series of events.”

The Role of Birthdays
What does it take to achieve success as a professional athlete? For some, it takes a fortunate date of birth. In hockey, as in most sports, kids begin competing in grammar school. Since kids compete with their classmates, being the oldest in the class rather than the youngest provides a huge competitive advantage. That head start multiplies over time. 40% of Canadian pro hockey players are born between January and March, which, in grammar school, makes them the oldest in their class. Only 10% are born from October through December, which makes them the youngest in their class. The oldest kids wound up with a 4:1 advantage over the youngest.

The same kind of age disparities show up on the academic side as well. Kids are fast-tracked in school the same way that they are on the sports field, and those early differences are just as hard to overcome.

One last story from Malcolm Gladwell’s book. This one is also about the role of birthdates in success. If we look carefully at a list of the 75 wealthiest people in history, from Cleopatra to the present day, 14 of the 75 – almost 20% of the list, were Americans born between 1831 and 1839.

As Gladwell explains it, they were of perfect age to take advantage of the biggest industrial expansion in American history during the 1860s and 1870s. The expansion birthed new industries – and new fortunes – in railroads, oil, banking, finance, steel, manufacturing, streetcars, meatpacking, etc.

Each of these titans was born in just the right decade. When the boom unfolded in front them, they were at their peak of their business prowess, and they made the most of their unprecedented opportunities.

If we believe in having a fair society, then we have to begin to account for the role of chance in people’s lives. Because of the extremes of wealth and poverty in America, we tend to over-reward success, and over-punish its lack. But the line between the two is sometimes very thin, and is often driven as much by chance as ability.

How about you, dear reader? If you have a story of how chance made a difference in your life, email me at the address below. If we get enough responses, we will do a follow-up story.

You can ask Art Pope, the CEO of Raleigh-based Variety Wholesalers. Last year, he and his family invested $240,000 in legislative races all over the state. Their favored candidates won enough races to win control of the State Legislature for the Republicans. It’s the first time that the Party has controlled both statehouses in North Carolina in more than 100 years.

Pope is one of a new breed of Oligarchs who choose to circumvent the democratic process and dictate public outcomes through sheer power, money, and will.

According to the Institute for Southern Studies (see their report at http://bit.ly/dn4VpZ), Pope and other family members in 2010 personally contributed $240,000 to Republican candidates in 22 highly-targeted races. Three “independent” political groups – Americans for Prosperity, Civitas Action, and Real Jobs NC – poured another $2,000,000 into the same races. ISS reports that all three are closely tied and significantly funded by either Art Pope personally, his family, the family business, or the family foundation.

Eighteen of these races were won by Republicans, and that tipped the balance of control in the legislature. Most Carolina political observers agree that it would never have happened without Art Pope’s money.

Though Pope is a conservative Republican, the Oligarch movement spans the ideological spectrum. It includes such stars as Grover “No New Taxes” Norquist in politics, and Bill Gates in Charter School education.

Norquist is the “Doctor No” of the Tax Movement. His national influence has been building for years, thanks to his campaign to get Republican candidates to sign his “no new taxes” pledge. That communal pledge was the number one reason why the Congressional Budget Super-committee struck out on a deal to reduce the country’s debt by some 4 trillion dollars.

The committee’s most prominent proposals included a mix of large spending cuts, the elimination of tax loopholes, and modest increases in taxes on the wealthiest Americans. Polls show that a significant majority of Americans favor these tax changes. Plans with tax increases as well as spending reductions had wide support among economists and budget experts, and broad bi-partisan support outside Congress.

None of that mattered. Even though most economists think it is insane public policy to prohibit all tax increases under all circumstances, Norquist’s “No-Tax-Increases-Ever” policy prevailed. The net effect is to continue the Washington stalemate and further diminish the reputation of the government.

Norquist, in the meantime, just keeps smiling. Though never elected to anything, he nevertheless wields enough power to impose his own vision of taxation on three hundred million of his fellow Americans.

The Other End of the Spectrum
At the other end of the Oligarch spectrum is Bill Gates, founder of Microsoft. A recent New York Times article called Gates one of the “Policy-Making Billionaires” who have shifted their focus from donating to charities to “pouring billions” into advocacy.

According to the Times story, the Gates Foundation has been investing heavily in support for more charter schools. As one example, charter school supporters lobbied for changes to the “Race to the Top” education program. As a result, states that participate can no longer limit the expansion of charter schools.

Whether you oppose or favor charter schools in not the issue here. This kind of big money influence takes decision-making power out of the hands of parents and the local school community. It transfers that power to people with deep pockets and a particular policy axe to grind.

Charter School fans of course welcome the Gates help. But others see it as an undemocratic intrusion. Education scholar Diane Ravitch criticizes the charter advocates as a “billionaire boys’ club.”  She warns that they exert enormous influence over education policy with little accountability.

The same Times article quotes Richard L. Brodsky, a former New York State lawmaker: “It’s sort of influence-peddling writ large. The notion that the society is better served by the super-rich exercising their charitable instincts is in the end anti-democratic.”

Government of the Few
The Oligarchs rightly recognize that government is sinking into a partisan swamp of stalemate and inaction. That breeds unrest among the voters, and distrust of government at every level.

There is a dangerous vacuum building between what we expect from government and what it delivers. These oligarchs and others like them are poised to step into the breech and create change that the political system can’t or won’t produce.

Thanks to the new oligarchs, we are moving backward toward government of the few rather than forward to better government by and for the many.

One of the 20^th Century’s most influential economists, Milton Friedman, spent a lifetime advocating that business has no legitimate goal except the pursuit of ever-greater profits. Should we be guided solely by self-interest or even greed in the pursuit of our economic lives?

It’s not just an idle question. It goes to the heart of public policy questions about accumulation of wealth, progressive taxation, corporate social responsibility, and social safety nets.

The fundamental free market belief is that everyone is driven, or ought to be driven solely by self-interest. If we buy that belief, then it’s only a small leap to the next one, which says that the only true goal of business is the maximization of profit. But maximizing profit also means maximizing individual income and wealth. And that pretty much brings us to where we are today, where 20% of the population owns 85% of everything worth owning in America.

What becomes of fairness and justice in a world driven by self-interest?

There’s a new field of economic study called Behavioral Economics, and it was created to answer these kinds of questions – not by listening to what we say, but by looking at what we do.

The Ultimatum Game
A famous study from Behavioral Economics – called the Ultimatum Game ­– casts an interesting light on the idea that we are driven solely by self-interest. It also hints at the reasons behind our current culture wars against the wealthy.

Here’s how the Game works. Two people are approached with an offer to split a significant sum of money. There are a couple of conditions. One person will make an offer to the other about how the money will be divided. The other person either accepts or rejects. If the second person says no, the deal is gone for good – no negotiations, no discussions, no do-overs.

Classical economic theory proposes that we always rationally pursue our self-interest. Therefore, if we hold position number two, we should accept any split above zero dollars. After all, any amount of new money in our pocket leaves us better off than we were before.

But that isn’t what happens in practice. When the split for person two drops to $30 or less, the offer is almost always refused. This experiment has been run dozens of times in different circumstances, but the results are virtually the same. People would rather turn down money than accept a deal that isn’t fair.

The British consultant and lecturer James Thirtle expresses it this way: “Fairness allows societies to exist …we still feel very strongly when another individual is treating us unfairly, and will act in a way designed to demotivate that behavior – even if it costs us personally.  It’s necessary because ensuring others act fairly is necessary to keep society functioning and that society is much more important in the long term than the short term loss of some money.”

We Crave Fairness
So, we seek economic fairness – economic justice – as avidly as we cherish the liberty to pursue our own interests.

Liberty and Justice – we crave them both. It’s why our Founding Fathers and Mothers saw fit to pair up two virtues so opposite in intent. We hold them in our mind as one, Liberty and Justice, barely mindful that each of the virtues is the other’s opposing twin. Liberty and justice dance together in uneasy partnership. Each wants to follow its own urges, but each is necessarily limited by the other.

Entrepreneurial freedom – the opportunity to be all that you can be and get all that you can get – is embedded deeply in the American Myth and in the national psyche. But so too is its opposite twin – the idea that all citizens are entitled to some fair share of the national wealth. And the cry out for fairness is not simply a wayward impulse towards socialism, as its detractors like to think.  It is instead a cry for balance that is deeply rooted in ethical, moral and social principles.

Most of us would agree, for example, that allowing a few people to accumulate too much power or too much money usually results in less freedom for all. That was so obviously the case, for example, in the recent sub-prime mortgage scandal. The lure of quick bucks at every juncture of the mortgage business nearly sank the entire banking system. And, when the whole mess finally imploded, it dried up credit all around the world. Everyone who depends on credit got hammered as a result.

The Mystery Grist
To repeat Thirtle’s point, fairness is a fundamental principle for a civil society. We drum it into our children again and again, in words that echo from every play space and playground: “If you aren’t willing to share, then you don’t get to play.”

This clash of opposites is the mystery grist for the human mill. We each carry the seeds of greed and generosity, self-interest and self-effacement, darkness and light, guns and roses, war and peace, saints and sinners, Ma Barker and Mother Teresa. Each of us is a part of it all, and a part of each other as well.

Life seems best lived in an uneasy balance of opposites. Freedom and fairness – we’re wired for both.