Hold on -- there's a big difference between "the government reneged on its promise to keep squatters off your land" vs "no one wants your land anymore". If they start turning a blind eye to squatters, it's fair to criticize that government for reneging. If the other city becomes such a vibrant spot that no one wants to live near you -- different story entirely.
While local governments are arguably failing to require newer livery services like Uber and Lyft to meet e.g. higher insurance requirements, they are not reneging on the medallion promise, which still gives holders the exclusive right to pick up street hails. That right is still enforced, and the Uber/Lyfts of the world are not infringing on it. The situation is much closer to "street hail pickup rights aren't valuable anymore" than "governments enable encroachment on the right to pick up street hails".
And before you dismiss "arranged hire" (livery) vs "street hail" as a technicality, there are very good reasons to put a cap on the latter but not the former (and otherwise subject the latter to harsher regulation):
- By necessity, street hails require clogging of "Schelling points" where drivers can expect to get line-of-sight to a potential fare, and vice versa. That doesn't happen with livery, where they go only where requested, not significantly different from a private car.
- Street hails create a risk of fighting over fairs, livery doesn't.
- Street hails enable you to pressure naive passersby/tourists to take your rate, livery requires you to ask for the fare from a central service.
- Medallion holders get use of the scarce privileges to use taxi stands and bus-only lanes, livery doesn't.
- Livery creates a central, auditable record of the event, while street hails can rip you off without showing up on an audit.
To be sure, Uber/Lyft are flouting even some of the requirements of livery services ... but the medallion case looks more like "street hails are becoming obsolete in the information age, so of course they'll lose value".