If someone stuffs a hand down your shorts and grabs a fistful of your
pubic hairs, it's safe to say that (s)he has your attention, that they have control of the situation. This is what having you by the short hairs means. While using a somewhat crude reference, this phrase has been heard on
NPR. In fact, I heard it just now, which is why this node was created.
Someone, at some point or most of your life, has had you by the short hairs. Perhaps it is a thought in your own mind that controls you. There is nothing pleasant about, say, catching a pubic hair in the zipper of your pants. It's an area quite sensitive to both sexes and one usually reserved for more genteel contact. It's not like getting kicked in the balls or, for a woman's compatible example, falling on your bike or slipping on the uneven parallel bars. That, while being painful and lingering, loses its control of you. It's used as a retaliation, not control.
The phrase is often used as an expression of helplessness, an awareness that one's hands are tied but with a more personified captor. Anyone who grabs you by the short hairs knows what he's doing is bullying, unkind and painful, kind of like being yanked repeatedly while kept on a leash, as dogs are. He's well aware, is unlikely to stop, since in just using the phrase you have given him the power to continue. It's a phrase often used as an excuse to co-workers when venting frustration or to a spouse, as a pathetic apology or admission of weakness.
Mortality, you could say, is one thing that has us all by the short hairs. But we can deal with that better than when it's a person at the helm. We reach a point where we either accept it or rebel. Who's got you by the short hairs these days?