The Duck of Minerva

Corporate realpolitik

24 March 2009

What should we call this?

FedEx in January announced it had renegotiated a deal to buy 777 Freighters from Boeing over the next decade. The company increased its order to 30 planes from 15 and agreed on an option for another 15 planes.

The labor-related cancellation provision came to light in FedEx’s filing on third quarter earnings. “Our obligation to purchase these additional aircraft is conditioned upon there being no event that causes FedEx or its employees not to be covered by the Railway Labor Act.”

The overwhelming number of commentators on the article see FedEx’s move as a blow on behalf of economic freedom; a kind of first-shot in the revolution against the liberals.

So what is the connection between this battle and ditching Boeing for Airbus? None, really. Airbus is pretty unionized, and few would argue that European labor laws are more pro-corporation than US labor laws

In truth, this is simply corporate extortion. A All FedEx cares about is continuing an unfair advantage over UPS. Because FedEx was founded as an airline, its truck drivers are covered by the Railway Labor Act. UPS is subject to no such quirk. So how to maintain this exemption? Threaten American jobs at another corporation–and unionized ones at that.

It all amounts to a pretty stark demonstration of the stakes of the current battle over the economic policies of the country, and of the correctness of underlying rationale for a new progressive agenda.

(H/t Josh Marshall)