Why can't we get rid of taxi medallions? (2012) | Hacker News Reader

Why can't we get rid of taxi medallions? (2012)

slate.com

39 pointsadrianmacneil24 comments

> “A taxi medallion system is nearly impossible to end even if it proves to be providing unfairly high gains to a limited number of original medallion owners,” the report concluded. “Medallion owners fiercely resist any possible threat that may challenge their advantage.”

It's crazy how defeatist they sound in this article. Little did they know that in just 3 years companies would be struggling to get rid of their medallions, and the taxi lobby would be in ruins.

Price is dropping fast.

http://nycitycab.com/business/taximedallionlist.aspx.

Current owners are putting it up for sale for less than $600,000.

I guess it's uber effect.

To save you looking it up, prices peaked in 2011 @ $1 million for a medallion.

Interestingly corporate medallions are now pushing toward $1 million ($280k in 2004).

And if the 13,347 medallions were once valued at $1mil and now $600k that's a $5.3 billion paper loss. Ouch

https://en.wikipedia.org/wiki/Taxicabs_of_New_York_City#Meda...

Medallions are a productive asset, so 5.3 billion is somewhat disingenuous.

Wouldn't the current and future production be factored into the price, though? I'd have to guess that 5.3 billion is a low estimate for actual losses if you owned one of these in 2011 and still hold it.

Your double counting the returns as future cash flows are already factored into the sale price.

Suppose you had a bond worth 2$ that paid out 1$ and is now worth 1$. That's not a paper loss of 1$.

PS: At the last auction, in 2008, the opening bid was $189,000, and medallions sold for as little as $226,000. http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/

In total, TLC will be auctioning off 2,000 new medallions, 40 percent of them to drivers. (January 20, 2014) that's a significant part of the price drop.

PPS: Peaks 130$ per sift * 2 shifts per day call it 75 to 100k / year. 4 * 75 = 300k, 4 * 100 = 400k. So, yes they lost value, but far less than you might think.

I was speaking more to the loss of future earnings because of the lower demand for traditional taxis. Any earnings you do get out of ownership are already calculated into the value of the medallion, so not only are you losing the difference in value but also the earnings that it enable you to receive (but you'll no longer get even though you spent the original price expecting them).

Yeah, and it's never been easier to get a taxi in NYC. They artificially restricted the supply of medallions since at least the 70s, and that led to a severe undersupply of taxis (especially in the outer boroughs). Uber has largely fixed this.

It's even better for the taxi drivers who have to rent the medallions for 12 hour shifts. There were more drivers than taxi's until recently and drivers would bid the rental prices up. It was either that or they didn't make any money. Now garages sit with extra cars.

Instead of paying up to $250 for a shift drivers now have the power and can pick between garages and get a car for $125 now. That's money directly in their pocket.

Every NYC cabbie I've spoken to who doesn't own a medallion loves Uber for precisely this reason. I'm sure it will balance out but certainly not in the garages favor. But for people with a hack license and an Uber account, they have the power to pick and choose which option serves them best today and that might mean driving a cab one day and driving their Uber the next.

It's for precisely this reason I can't see why the left tends to be suspicious of Uber in NYC. I think it's great drivers have agency.

The outer borough Green Cab system also plays a huge part— the licenses to drive a green cab are available for a few thousand dollars, and thus the formerly illegal-but-accepted car service street hail system has been brought into a legal framework.

What I don't understand is, why are they allowed to sell the medallions at all? The problems with the medallion system stems from the fact that due to supply/demand problem, their prices skyrocketed. But they should quite simply be non-transferable.

If you made medallions nontransferrable then you would see each medallion be owned by its own individual corporation, then the corporation would be sold instead of the medallion.

A fixed term license would be a better idea.

If I remember correctly from this[1] Planet Money podcast about a man who owns many medallions, the guy does have separate company names for each medallion.

http://www.npr.org/sections/money/2015/07/31/428157211/episo...

If the government only hands out new ones that cannot be sold to humans that problem cannot occur.

I think they should be transferable, but they should only last for 5 years or some other reasonable fixed term. Make it long enough that there is some stability; but not so long that it becomes something that is like a real estate or mineral rights investment. Let the city auction the fraction of them that come up for renewal each year; so that instead of a private entity making money off a scarce city resource the city would.

It seems like they should have either used the medallion or returned it to the government. How do we fix it now though? Does the government get rid of medallions? Does someone refund the people who bought them? It's pretty clear people prefer the uber model but the cabs do have at least on reason to be mad, the medallions they bought to comply with regulations.

Why should taxpayers bail them out? They bought into a monopoly and that's like paying the teacher a bribe so you can take other kids' lunch money. This is a perfect example of corporatism, and should not be rewarded with a soft landing when it fails.

We don't have too. We could just say "you must have a medallion to operate a cab". They secondary market drove up the prices so I guess it doesn't make sense to have the gov reimburse them. If there was no secondary market then it might.

In kleptocracies like Philly, there's similar game called "pay to play," where anyone wanting to bid on a city contract has to make some administrator happy in some personalized way. City admins routinely go to jail for this.

Discussed in 2012: https://news.ycombinator.com/item?id=4088941.

Interesting. I just stumbled across this and thought it made for amazing reading, considering how much has changed in just 3 years.

No kidding. "Uber" appears nowhere in the article.

This was right around the time Uber realised what their UberX could be, after seeing Lyft's system be left alone.

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