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posted by LaminatorX on Sunday November 30 2014, @01:46PM   Printer-friendly [Skip to comment(s)]
from the rent-seeking dept.

Most major American cities have long used a system to limit the number of operating taxicabs, typically a medallion system: Drivers must own or rent a medallion to operate a taxi, and the city issues a fixed number of them. Now Josh Barro reports at the NYT that in major cities throughout the United States, taxi medallion prices are tumbling as taxis face competition from car-service apps like Uber and Lyft. The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data. "I’m already at peace with the idea that I’m going to go bankrupt,” said Larry Ionescu, who owns 98 Chicago taxi medallions. As recently as April, Boston taxi medallions were selling for $700,000. The last sale, in October, was for $561,000. “Right now Uber has a strong presence here in Boston, and that’s having a dramatic impact on the taxi industry and the medallion values,” says Donna Blythe-Shaw, a spokeswoman for the Boston Taxi Drivers’ Association. “We hear that there’s a couple of medallion owners that have offered to sell at 425 and nobody’s touched them."

The current structure of the American taxi industry began in New York City when “taxi medallions” were introduced in the 1930s. Taxis were extremely popular in the city, and the government realized they needed to make sure drivers weren’t psychopaths luring victims into their cars. So, New York City required cabbies to apply for a taxi medallion license. Given the technology available in the 1930s, It was a reasonable solution to the taxi safety problem, and other cities soon followed suit. But their scarcity has made taxi medallions the best investment in America for years. Where they exist, taxi medallions have outperformed even the Standard & Poor’s 500-stock index. In Chicago, their value has doubled since 2009. The medallion stakeholders are many and deep pockets run this market. The system in Chicago and elsewhere is dominated by large investors who rely on brokers to sell medallions, specialty banks to finance them and middle men to manage and lease them to drivers who own nothing at all. Together, they’re fighting to protect an asset that was worth about $2.4 billion in Chicago last year. “The medallion owners seem to be of the opinion that they are entitled to indefinite appreciation of their asset,” says Corey ­Owens, Uber’s head of global public policy.. “The taxi medallion in the U.S. was the best investment you could have made in the last 30 years. Will it go up forever? No. And if they expected that it would, that was their mistake.”

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  • (Score: 2, Interesting) by Horse With Stripes on Sunday November 30 2014, @02:17PM

    by Horse With Stripes (577) on Sunday November 30 2014, @02:17PM (#121271)

    Whet they need to do is read this submission [soylentnews.org] and just follow Singapore's lead.

    • (Score: 1) by cge on Monday December 01 2014, @08:19AM

      by cge (67) on Monday December 01 2014, @08:19AM (#121447)

      At least in LA, taxis are somewhere between double and triple the price of Uber and Lyft. It doesn't matter if they have an app to call them, when a $30 trip with UberX costs $80 with a taxi.

  • (Score: 5, Insightful) by Arik on Sunday November 30 2014, @02:23PM

    by Arik (4543) on Sunday November 30 2014, @02:23PM (#121272) Journal
    "Taxis were extremely popular in the city, and the government realized they needed to make sure drivers weren’t psychopaths luring victims into their cars. So, New York City required cabbies to apply for a taxi medallion license. Given the technology available in the 1930s, It was a reasonable solution to the taxi safety problem"

    No, it wasnt.

    Don't even give that BS credence. The one has absolutely nothing to do with the other. The ability to purchase a medallion has no direct relation with whether or not one is a psychopath. Some cities have a licensing regime for the actual drivers, rather than the medallion owners, which includes a criminal background check. Even that is, in practice, much more about aggrandizing the power of the regulators and enabling those they favor to make rents, but at least it there is a tenuous connection. The medallion system doesnt even make the attempt.
    --
    If laughter is the best medicine, who are the best doctors?
    • (Score: 0) by Anonymous Coward on Sunday November 30 2014, @02:41PM

      by Anonymous Coward on Sunday November 30 2014, @02:41PM (#121275)

      Yeah, I too was angered by that rubbish but then noticed your post.

    • (Score: 3, Informative) by tonyPick on Sunday November 30 2014, @03:45PM

      by tonyPick (1237) on Sunday November 30 2014, @03:45PM (#121284) Homepage Journal

      The quote in the summary is from the priceonomics blog. Whilst the quote is alarmist there were some valid arguments for the Medallion system, as enforced by the Haas act, at the time though (other than "aggrandizing the power of the regulators and enabling those they favor to make rents", of course):

      http://www.nytimes.com/1996/05/11/nyregion/medallion-limits-stem-from-the-30-s.html [nytimes.com]
      http://politicalentrepreneurs.com/taxi-cab-medallions-uber-and-the-transitional-gains-trap-part-1/ [politicalentrepreneurs.com]
      http://www.schallerconsult.com/taxi/taxi2.htm [schallerconsult.com]

      And for the official line:
      http://www.nyc.gov/html/media/totweb/taxioftomorrow_history_regulationandprosperity.html [nyc.gov]

      • (Score: 5, Informative) by Arik on Sunday November 30 2014, @04:08PM

        by Arik (4543) on Sunday November 30 2014, @04:08PM (#121287) Journal
        "http://www.nyc.gov/html/media/totweb/taxioftomorrow_history_regulationandprosperity.html"

        You don't even really have to read between the lines to get the point here, they say it fairly clearly and early on:

        "The Act's provisions included a limitation on the number of "medallion" licenses (and therefore, taxicabs) to the number that existed at the time. This number would be further reduced through attrition. As anticipated, this brought the supply of taxicabs closer to the level of service the public demanded, thus calming the fierce competition for customers. "

        That's what it was about - reducing competition.

        Uber is killing that and that's not a bad thing though obviously there is the danger of Uber gaining a position to reduce competition nation-wide instead of just in one small market - something to watch as time goes on.
        --
        If laughter is the best medicine, who are the best doctors?
    • (Score: 4, Interesting) by opinionated_science on Sunday November 30 2014, @03:48PM

      by opinionated_science (4031) on Sunday November 30 2014, @03:48PM (#121285)

      when in NYC last month a buddy of mine had the uber app. The one time we took a yellow cab (those new box like ones) he was unable to keep his eyes on the road (looking at you in the eye directly by turning around!!). Stopped at a light and started hurling abuse at someone in the back of another cab.

      On the same trip at the Cloisters being approached by anonymous car "you need ride"?.

      Uber turned up when promised. Taxi cabs no where to be found on many occasions.

      Uber has its problems, but the current Taxi system has become extremely inefficient. So if Uber pays their taxes, I would say the Taxi firms need to get on board or become footnotes in history.

      When android-cars become common, the only people left "driving" the vehicle will be the ones where legal liability requires an operator human to be present.

      The future is a balance of what is practical and what is possible. This issue of Uber is connected to the idea of minimum wage.

      How little an hour can a human earn, and be considered a member of society?

      • (Score: 2) by edIII on Monday December 01 2014, @02:41AM

        by edIII (791) Subscriber Badge on Monday December 01 2014, @02:41AM (#121384)

        The future is a balance of what is practical and what is possible. This issue of Uber is connected to the idea of minimum wage.
        How little an hour can a human earn, and be considered a member of society?

        How so? I can't honestly see that at all. I've yet to weigh in on Uber or Lift as rent seeking and corporate-government malfeasance is rather banal and uninteresting to me at the local level. I've also never needed routine access to such transportation.

        The balance between what is practical and what is possible is a vague statement. In all fairness it applies to almost every design process we undertake as engineers. It's the white coats in R&D that get to blow shit up "just because" to keep pushing possible into practical. In that respect, smart phones with ubiquitous Internet connections allowing use of sophisticated processes does indeed make quite a bit of what is possible now practical. In some cases, what we thought was wholly impractical.

        Minimum wage is only involved in the sense that the drivers are being compensated for more than their associated costs of driving. Minimum wage is an insulting term by definition. It means that your contributions will be valued to the lowest extent by law, and this can be substantially lower than what is agreed to be needed considered "living".

        So Uber has two wholly different kinds of drivers. Those who are not remotely interested in being compensated for their associated costs of driving, and would happily settle for a reasonable fraction, and those who wish to make a living. It's the difference between car pooling and getting a Taxi. What Uber does is adroitly reveal the markets, how they have failed or succeeded to serve their customers, and creates an alternative economy in competition to the entrenched interests and players. Hell yes, it's disruptive. Is it unfair though?

        On one hand Uber serves purposes for car pooling (single threaded) quite well. If they made it easy and I knew there was a 3rd party with paper trails, I would be somewhat amenable to blind car pooling. Uber creates an entirely new market, with new regulations, and new players. The initial market is one that could be barter. Admittedly both Uber and Lyft control prices, which is not shocking and instantly evil. They want to be middle men, but are also stepping up and providing tools and additional insurance.

        Uber is only an "evil" WRT to minimum wage because in some cases it illustrates what was true all along; People are willing to carpool and receive reasonable compensation towards the costs.

        Where this is strongly true and the barriers to entry were strong and state protected we see a lot of strife and anger. So I'm thinking this is not really about minimum wage at all, and it was about controlling access to an entire market. Now the street level workers are figuring out that the market was entirely artificial to begin with. In some cases it comes along with the bittersweet knowledge that the people who own them are also losing their assess.

        Might all the cabbies go out of business when the market is flooded by additional free miles like Google does with free email? We may want to possibly consider that all the cabbies going out of business might be a good thing. Where the market supports better compensation to the point you could live off it, what you will see is highly qualified cabbies, impeccable men with invariably sweet smelling cabs.

        The only reason why this is disruptive is that Uber holds up the mirror and shows that a lot of taxi markets are wholly corrupt and artificial all the way up to the state level. Uber is bringing competition and transparency to these markets. The issue of minimum wage is separate, and not correct to apply when the idea of driving for Uber is not always profit. If you felt strongly about that, then Uber can allow two account levels. A "Settler" and a "Worker".

        A Settler can work for less and acknowledges that this is just about getting another person to contribute gas money. Ohh, and some more insurance. Lyft does that. The issues of worker rights, unions, vaca...blah blah blah blah are signed away as a Settler.

        A Worker can demand a living wage for their time in addition to operating costs, while retaining all rights and privileges affordable by law as a worker. Tit for that, that also means they are treated as W4s, or at least 1099s. Settlers can be grouped in with environmental legislation where the burdens of taxation are lifted in this case. At the very least, a Settler could claim an exemption I'm sure for the income.

        The difference between a Settler and a Worker is handled under account preferences.

        I'm not seeing your condemnation of them being supported. Uber doesn't seem to be destroying markets and lives as much as it only revealed they shouldn't be alive in the first place under true capitalism and free markets.

      • (Score: 0) by Anonymous Coward on Monday December 01 2014, @02:53PM

        by Anonymous Coward on Monday December 01 2014, @02:53PM (#121518)

        On the same trip at the Cloisters being approached by anonymous car "you need ride"?.

        We call em Gypsy cabs or dollar cabs. I notice many of them are driven by African immigrants. Good for short trips in a pinch. You can often negotiate the fare. Sometimes they refuse your destination if they deem it too far to make any money. You then get out and another driver will beckon you and take the job (the desperate driver who takes anyone). I used to take them to college from the bus stop during inclement weather.

        Uber turned up when promised. Taxi cabs no where to be found on many occasions.

        Its called car service, provided by private limousine or livery car companies licensed by the Taxi and Limousine Commission (TLC). There are plenty of livery cabs in NYC. You have to call them to get a car. Livery cabs can't pick up people randomly like a medallion cab can; they must be summoned (Though they routinely break this rule).

        The yellow cabs are too damn busy jamming up the streets of lower/mid Manhattan or picking up people from the airports. Why? That is where the money is. Yellow cabs don't make money in the outer boroughs. To alleviate that problem, they created the Borough cab which are green colored cabs owned and operated by local car service companies who have a permit via the Borough cab program. The Borough Cabs have certain restrictions and still don't address the problem of cab availability. They can't pick up at airports and they can't pick up fares in Manhattan south of 96th st on the upper east side and south of W110th st on the upper west side (the so-called yellow zone). North of those areas is Harlem and north of Harlem is Washington heights and a few other neighborhoods. Those areas in Manhattan are acceptable for borough cabs to pick up street fares. The reason borough cabs fail is they frequently break the yellow zone rule and pick up fares in lower/mid Manhattan and swarm to more lucrative locations around the boroughs to pick up fares. I know a borough cab driver and they do make more money than livery drivers.

        The reason Uber is better in practice is because Uber enables a non centralised taxi service through a centralized portal. The licensed taxi and car services are not united via a central portal making them more difficult to find. If you want a car home from the bar you often have to google search for a car service or ask the bartender. Yellow cabs and borough taxis are nowhere in sight. That or there is a chance that car service cabs hang out near bars illegally looking for fares. So you wander around until you find one. With Uber you simply summon a car to your location. That is tough to compete with.

  • (Score: 5, Interesting) by iwoloschin on Sunday November 30 2014, @02:24PM

    by iwoloschin (3863) on Sunday November 30 2014, @02:24PM (#121273)

    Here in the Boston area taxis are terrible. The "Greater Boston Area" actually consists of several independent cities, Boston is the largest, but many people are going to Brookline, Cambridge, Somerville, Medford, etc, all of which are within a couple of miles. If you're in Boston proper you can only flag a Boston taxi, so if they drive you to Somerville, they can't legally catch a flagged fare to take back to Boston, they have to deadhead all the way back to Boston. Then there's an artificial scarcity so there's never a taxi when you need one, because they're all driving back from some place that they can't catch a fare from.

    If the taxi industry is suffering all I have to say is too bad for them. It's a government sanctioned monopoly with "guaranteed" pricing, until capitalism knocks on the door with a rocket launcher. Yes, there should be some regulation of the taxi (or taxi-like) industry, but medallions are not the way to go.

  • (Score: 3, Insightful) by RedGreen on Sunday November 30 2014, @02:51PM

    by RedGreen (888) on Sunday November 30 2014, @02:51PM (#121276)

    Once they have discovered the cure for a parasite, then when the medicine is administered to a sick host the parasite dies and the body's system recovers to a healthy state...

    --
    "I modded down, down, down, and the flames went higher." -- Sven Olsen
  • (Score: 5, Interesting) by francois.barbier on Sunday November 30 2014, @05:16PM

    by francois.barbier (651) on Sunday November 30 2014, @05:16PM (#121295)

    This is a pure and simple example of artificial scarity in real life.
    Another one from Belgium is called the "Numerus Clausus" (http://fr.wikipedia.org/wiki/Numerus_clausus)
    To sum it up, we have a fixed number of doctors per inhabitant.
    Although a lot of student finish their medecine degrees, only a handful will receive an INAMI number (doctor's medallion).
    It means most of them pay for +5 years of medecine studies, earn a degree, but can't practice legally... WTF?
    The worst is that the government doesn't do anything about it.
    Full-time young doctors are always full-booked, and older ones only work part-time (but still using a full INAMI number).
    And it remains a status-quo. Uber-like apps won't help here.

    • (Score: 2) by kaszz on Sunday November 30 2014, @09:52PM

      by kaszz (4211) on Sunday November 30 2014, @09:52PM (#121334) Journal

      You go to a clinic in another country? both as a patient and doctor.

      • (Score: 0) by Anonymous Coward on Monday December 01 2014, @07:18AM

        by Anonymous Coward on Monday December 01 2014, @07:18AM (#121437)

        Belgian health insurance won't cover you then if you're a Belgian national. Person with medical degree from Belgium then needs to get medical license in other country. And other country's nationals get medical care instead.

    • (Score: 2) by bob_super on Monday December 01 2014, @05:18PM

      by bob_super (1357) on Monday December 01 2014, @05:18PM (#121565)

      Before you complain, check the prices in the US, where you can find a nice abundance of doctors (as long as you're in a nice area).

      In France, the Numerus Clausus affects the number of students, so that they don't graduate too many shitty ones. On the other hand, when those move to another country where a doctor's diploma will make you rich, the system has to import Eastern European doctors to fill in the gaps.

  • (Score: 0) by Anonymous Coward on Monday December 01 2014, @05:06AM

    by Anonymous Coward on Monday December 01 2014, @05:06AM (#121405)

    From my understanding Uber has to put up a one million dollar bond to insure for certain things.

    From what I understand to start your own security company also requires a 1 million dollar insurance bond in California. These laws are at least partly designed to ensure that only wealthy people can start such a company and that the poor people are dependent upon the wealthy to hire them instead of starting their own business hence maintaining the status quo.