Brownout

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I used to admire UPS, or “Brown,” as it calls itself (“What can Brown do for you?”). It seemed a model company, performing a good service, charging reasonable prices, and still managing to make a profit. But of late UPS has been acting like a classic sore loser, trying to use the government to destroy competitors that it cannot outcompete — something economists call (in their snappy patter) “rent-seeking.”

To set the scene: UPS is of course a major player in pack-age delivery services. It operates a massive fleet of trucks and airplanes. It is unionized, with its workers represented by the Teamsters. The union has increased the company’s costs, naturally, but hey, that’s what unions do — that’s their raison d’etre, as the French say (in their snappy patter); and UPS management agreed to the union contracts.

This has no doubt helped UPS’ main competitor, FedEx, another company that provides a great service, at decent prices, and still manages to grow and make a profit. Together, the two companies move about 23 million packages a year, and their rivalry goes back well over a decade. And here’s the rub: FedEx has so far escaped the Teamsters’ clutches, which enrages UPS management just as much as it does the Teamsters.

Now, part of the reason FedEx has been able to keep the Teamsters off its back is that FedEx Express (its delivery division) has been federally classified as an airline, whereas UPS is designated as a trucking company. Being designated as an airline means that a company is under the 1926 Railway Labor Act, which makes unionization more difficult.

So the bigwigs in UPS management and the Teamsters union came up with a crafty idea: they want Congress to switch the designation of FedEx Express to a trucking company as a way to “level the playing field.” In other words, inflict the Teamsters on FedEx, so that its prices will rise, too! This is rather like a man with AIDS deliberately infecting another person — for money! It is a truly despicable plan.

But the plan is not so despicable that UPS hasn’t been able to find a congressman willing to push it. Rep. James Oberstar (D-MN), chair of the House Transportation and Infrastructure Committee, has introduced a measure that would reclassify FedEx Express as a trucking company. And the Teamsters have started an ad campaign to push the measure.

Note that UPS isn’t trying to use its lobbying power to get itself reclassified as an airline. That would be entirely ethical, but it tried that ploy in 1996, and lost. Moreover, if it tried it again, it would anger the Teamsters. No, what UPS wants to do is to use its clout in Congress to force unionization on its competitor. It wants to hurt FedEx, not help itself. This is what is so despicable, and justifies the FedEx dig that Oberstar’s measure is a “Brown bailout.”

FedEx and a number of companies that contract for FedEx are worried that if Oberstar’s measure is enacted, costs will soar, and FedEx will have to shrink its operations. Since FedEx uses contracting companies in 19 states, we are talking about a major hit to employment. And the prices it charges would likely be affected as well.

So what can Brown do for you? It can corrupt your Congress, prostituting it to drive its competitor out of business. In so doing, Brown can cost you your job and jack up the prices you pay.

So what can you do to Brown? Rep. Oberstar has an opponent in the November election, Mr. Chip Cravaack, who may need help. And until UPS starts behaving ethically, no one has to trade with it.

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