Taxi Medallion Prices Are Plummeting, Endangering Loans | Hacker News Reader

Taxi Medallion Prices Are Plummeting, Endangering Loans

bloomberg.com

110 pointsJumpCrisscross127 comments

Before feeling bad for the man you see behind the wheel, take into account that in many cases it is not the individual taxi driver who took the loan; some companies and individuals used medallions as a mere financial product, buying them in bulk and renting them to drivers.

For actual numbers and graphs see this NYT article: https://www.washingtonpost.com/news/wonk/wp/2014/06/20/taxi-...

If you don't have time to read it, two important points:

- "In New York today, there are four drivers for every medallion, all but ensuring that an investor who owns one can find drivers to lease it 100 percent of the time."

- "The threat to medallion owners isn’t that they’ll lose passengers to these services. It’s that they’ll lose drivers — who have been aggressively courted by Uber. A taxi driver who doesn’t own a cab and medallion can earn comparable fares driving UberX passengers in his private car, without paying a lease fee."

To expand, "fifty-eight percent of New York City’s cabs are owned by corporate entities such as Freidman’s. Just a third are owned by the people who drive them. As a result, most taxi drivers and Uber drivers find themselves in the same boat—working as independent contractors, logging brutal hours."

https://www.bloomberg.com/features/2015-taxi-medallion-king/

But they still have a union.

At that got them the same or worse deal than they would get with Uber, which doesn't have a union? That sounds like a great return on union membership fees.

At least in New York, it paid for lots of union leaders, administrators and interns.

Even better! We should unionize everyone and use the mandatory dues to pay for ever more bureaucrats/admins/interns, so that when we reach full-robot, everyone still has a job. :-)

Whose combined salaries barely scratch that of a CEO

The argument would be that the union's negotiations established a wage floor, and uber drivers get a freerider benefit. If uber's funding dried up, and they only paid drivers from what paasengers pay, they would have a lot more pressure to lower rates. Furthermore the union probably makes the wages sticky, rather than able to be lowered if competitors exit the market.

Though hailing cabs is inconvenient there probably is some socal utility to the medallion system beyond just rent seeking for the owners. For example the supply of cabs being steady at odd hours, and better compliance with ruling on serving all areas of a city.

Just a small point of disagreement: Often, in busy parts of NYC, hailing a cab is much more convenient that calling an Uber. Ubers often take awhile to get to you whereas a yellow cab can be hailed within a few seconds.

I am interested in the question you pose though - about the social utility of the medallion system. Perhaps there's some benefit in keeping the number of cabs limited in order to keep the roads emptier and thus more usable?

If a yellow cab can be hailed within a few seconds, it sounds like there are enough cabs to serve the market.

Would more cabs only lower the utilization rate and thus earnings?

>If a yellow cab can be hailed within a few seconds, it sounds like there are enough cabs to serve the market.

That's only true of certain areas and certain times.

The New York Taxi Workers Alliance is a non–profit that acts on behalf of drivers, but is not a union in the traditional sense. There is no "contract" between drivers and owners for example, there is no defined collective bargaining unit.

Odds are decent the majority are held by companies, these things were selling for multiple times what the drivers paid for the cars themselves.

At least in Chicago this is true, there's this data in the article: https://img.washingtonpost.com/blogs/wonkblog/files/2014/06/...

Right! So obviously, perhaps after some bankruptcies, new medallion owners will lease them at prices which are attractive to Uber drivers. And Uber will have more competition.

It'd be nice, but unlikely. They'll probably be snatched up by other companies buying them at a loss. Even if they drop, it probably won't be low enough for individuals to afford.

Then eventually they'll just go out of business. That's how it works. It won't matter what you think the medallion is worth if market prices determine its worth something else.

Considering Uber's financials, it's a good question who risks to get out of business faster.

So the eventual result might be huge gains for new medallion owners ;)

This is true. Although, Uber won't be the last taxi company.

To put it another way, if you think medallions are worth X but their market price is only Y (Y < X) then you should buy them for Y+1. If markets have significantly discounted their true price you'll make a windfall.

Only if Y+1 is likely to turn into X faster than Y+1 earns a normal economic rate of return plus a premium for the added risk.

Opportunity cost, the time value of money, and the price of dealing with risk conspire to make a lot of schemes that look good on paper not really worth it.

I wasn't arguing that drivers could afford them. Just that lease prices for drivers would drop.

They don't have to afford them outright. There could be external financing. It's like how the vast majority of people can't buy a home or car outright but can get a loan to do so. In this case if the price of the item is low enough, the value of the medallion itself would be the collateral.

This would be a good time to increase the number of them.

What amazes me from this Washington Post article is prices were still rising in a steep incline many years past Ubers launch in 2009. You would think 4 years later it was clear for enough people where the market was going, yet medallions doubled in price during this period (almost tripled by 2015).

Maybe that effect was more due to really low interest rates?

I was thinking the same thing but just because people get cheap money doesn't mean you throw it at anything. It still becomes an exercise of analysis and looking to maximise returns. In which case I'm still at 'WTF'

Why would you feel bad for a man selling you bad and overpriced service and demanding a weird monopoly on it anyway?

I wonder where all of a sudden all this mass sympathy for taxi drivers come from. I guess no one remembers how shitty and expensive trying to get a cab was in SF not even 10 years ago. I for one will be celebrating when the entire medallion system is completely dismantled and all the monopolists who exploited that system are bankrupt.

Wasn't the system that you seem to be condemning at least in part exploiting taxi drivers? Why wouldn't that earn them your sympathy?

You mean the taxi drivers that would pass me by on 3rd and Howard for 2 hrs because there was a conference and they could make more money servicing conference people? Or the taxi drivers that said they would be at my house at a certain time and then never show up, forcing me to wait another 45-60 mins for the next promised car, and then give up and drive myself and pay for parking? No, I don't have any sympathy.

Plus, they can always become Uber drivers, and have better earnings and make their own hours. 90% of all drivers I've had are happy to be driving for Uber.

Same. I once got thrown out of a taxi in the middle of a busy street, halfway to my destination because I accidentally admitted that I didn't have any cash and he would have to run my credit card. (This was just a year before all the drivers spontaneously realized that card users tip better and the practice changed overnight. But it would still be years later before rides could be reliably found in the outer boroughs…)

The taxi system is — or was — indicative of all these weird east coast attitudes that I, as a westerner, find completely insane. All these awful inefficiencies and shitty attitudes baked that everyone accepts as normal because that's just how things are done. (Basic traffic enforcement is another biggie… the "Masshole maneuver," and New Yorkers blocking intersections or parking on sidewalks, landlords who would rather risk lawsuits than do inexpensive repairs…)

Although I have moved on from Uber for various reasons, I will be forever grateful to them for tearing down this horrible system. It sucks that some independent medallion owners are going to take a bath on their loans, but it was a terrible investment in the first place.

Not to mention the racism.

He probably means the taxi drivers that would pass by my minority friends to pick me up. The look of horror in their faces as I waved my friends to come get in the cab was always some slight consolation. If it hadn't happened so regularly, it might have been funny. We now take Uber and it's never a problem.

I feel for any of the honest cab drivers that didn't pull this kinda crap, but my experience tells me that there weren't many of them.

I appears one of the main advantages of Uber is you don't get to see the guys who didn't want to pick you up. For one, it's less obvious an uber cab has driven past you than an official cab (NYC/London), and also only guys who want you will accept you as a ride. So you don't have that awkward 2am "it's not on my way home" conversation.

Was it exploiting them more than fast food and other industries?

We seem to be simply replacing the old monopolists with new ones. What makes you think the end game will be any less shitty than the old days?

Uber, Lyft, Sidecar, Flywheel, etc...

It still is. A few months ago I had to go to the airport and there were some problems with the Uber app. I hailed a taxi but it intentionally took a longer route. I was furious that I might be late for my flight. The driver apologized and said he wouldn't have done that if he knew that my flight would be leaving soon. He graciously capped the fair at 'only' $60.

Reminds me of my first few years in NYC (late 90s, early 00s). It was nearly impossible to get a yellow cab to take me to Brooklyn. There were plenty of nights where I would get into the cab, tell him my intersection and he'd sit there exclaiming "No Brooklyn! Get Out! No! No Brooklyn!". My place was literally a mile and a half away. Happened more times than I can count. And if you told them where you were going before you got into the cab - forget about it; your success rate dropped from around 50% to about 10%.

And then there was one time when I dozed off as we were crossing the Williamsburg Bridge. I woke up about 20 minutes later and we were somewhere near Coney Island (I lived in Bushwick, exactly a mile from the bridge. Coney Island is the other side of Brooklyn). I told him he could take me where I originally said for half the price on the meter, which was still more than the usual fare, or let me out without incident. That was a painful subway ride home that morning.

Londoner here. From my perspective the medallion system always seemed crazy. Contrast with London, in which becoming a licensed cab driver requires you to pass examinations, health and character checks, but the actual ticket price is pretty cheap in comparison. https://tfl.gov.uk/info-for/taxis-and-private-hire/licensing...

The difference being: London saw a need for cab drivers and introduced licensing to ensure quality, New York (and other cities) saw a need for cab drivers and saw a revenue stream.

Then again, the Knowledge is also pretty worthless in a world where GPS receivers are cheap.

They'll argue that the Knowledge allows them to route around bad traffic, rather than just following what SatNav or app says to do. Many cabbies have SatNavs that show live traffic conditions so they can do this, but they don't use them for navigation directly. Cabbies tend to know a lot more of the time saving shortcuts than the private hire drivers.

It's also very nice to be able to get in a black cab and say something like "The Civil Service Club please" and they'll know exactly where to go, no prodding at a phone/SatNav for a minute or asking for a postcode.

The downside is that some cabbies use that same knowledge to their benefit. I've been in several cabs where the driver has purposely used a route that's bad for traffic (rather than the obvious alternatives) so they can earn more money for a journey. (This is more common at times when fares are sparse.)

I live in a city where all the taxi drivers know where they're going, and regularly have to travel to somewhere that the taxi drivers rely on GPS. On more than once occasion with the GPS-enabled drivers I've had to stop them and give them directions; something I've never had to do when my drivers have local knowledge.

Give them a low review after the ride and help the problem sort itself out.

Or when you have apps like Waze for real time traffic updates. I have yet to find a built-in car satnav that wasn't horrible and hella expensive but Waze is free and crazy accurate.

Maybe that will be true one day, but I still keep struggling with minicab drivers who we have to guide street by street because their GPS keeps sending them outright idiotic routes that any driver who knows the area will know is going to be heavily congested.

We had this in Dublin in the late nineties. People had been trading licences for 30 years in a grey market. Licences could change hands for up to 90,000 Irish pounds. That would easily have bought a house in say 1997/1998.

The government then deregulates licensing and issued lots of licences and that grey market collapsed.

Of course some saw it coming and lumped some other less clear sighted chap with the problem.

More here: https://www.google.ie/url?sa=t&source=web&rct=j&url=https://...

And like the arrival of Uber, this was a massive boon for customers, and had unfortunate ramifications for the drivers.

A license shouldn't be sold. I cannot sell my driving license. A license should be acquired through a standardized test and a reasonable amount of people should be able to pass the test each year. The current medallion system which works in a majority of western countries is just corruption.

People would take the taxi way more if it was cheaper, thus buying less cars and polluting less. This is especially true in Paris where a ride to the airport is 70€ ! unbelievable (Uber is 50€).

Banning license sales inter alia would increase the cost of a taxi. Increasing the number of licenses would decrease the cost.

How so? I'd say it's opposite. Today when you pay a taxi ride you're not only paying the driver and the maintenance of his cab, you're also remunerating the capital the medallion's owner. If medallions were not tradeable, you wouldn't have to pay for them.

The market price of a ride is based on the supply and demand of a ride. Not being able to sell a medallion will reduce supply. Holding demand constant, price will increase as supply decreases.

If a medallion owner is happy driving 10 hours a day, but a potential owner would be happy driving 12 hours a day, the current owner should sell to the more eager driver and supply of rides will increase. If the owner cannot sell, then supply of rides is stuck at a lower level.

If the number of medallions in circulation is constant, the market price of a medallion is not a causal factor in the cost of a ride. The causality goes the other way around.

> A license shouldn't be sold.

Many proponents of cap-and-trade schemes disagree.

I think throwaw181ay is making a different argument, which is essentially that you should license the people (e.g. like a driver's license, which indicates proficiency) and not the thing, which is (basically) the car.

As far as I knew, taxi licenses were there specifically to certify that the driver was trustworthy. After all, the service involves getting into a stranger's car...

And they do -- you acquire the taxi driver certification ("this guy has good eyesight, isn't a criminal, knows the taxi rules") independently of the medallion ("no more than N cabs may be operating at any given time"). The two regs accomplish different purposes.

As the parent notes, in certain setups (like cap and trade) the tradeability of the license is important for ensuring that the restricted resource is used efficiently: the most economical emitters of carbon get the rights, and the most economical drivers get the medallions.

> the medallion ("no more than N cabs may be operating at any given time")

The whole point of this is to ensure that the price for taxi rides is higher than what the market-clearing price would be. In other words, it's a scam to rip off gthe consumer.

(Similar arguments apply to zoning regulations and house prices, of course)

There are good motives and bad motives behind every law. I don't find it productive to assert, as fact, that the malicious stuff is only kind, without addressing the good that they're ostensibly accomplishing.

You might as well dismiss all cap-and-trade proposals as being "just another scheme to raise energy prices".

A cap-and-trade scheme is a reasonable option if your goal is to limit the quantity of something (like carbon emissions) while allowing the market to behave as normal otherwise.

But there's no direct reason to limit the number of taxis. People suggest that limiting the supply ensures drivers make a decent living, but if you want that, employment law (e.g. enforcing minimum wage for drivers) is a more direct solution.

Considering the negative externalities of taxis on their environment (noise, pollution, congestion, and of course occasionally killing people) there are quite likely reasons to limit the number of taxis.

>(noise, pollution, congestion, and of course occasionally killing people)

Again, if we want to limit these things, we should make laws about them directly, rather than arbitrarily limiting one of their causes. Solutions to negative externalities should be primarily based on internalising those externalities, so the market has an incentive to seek alternatives.

What happens if someone invents a more expensive, but quiet and non-polluting taxi? (Which of course, they have.) If you limit the number of taxis, everyone uses the cheaper ones to maximise profit, and you still get some noise and pollution. Whereas if you tax the noise and pollution and it becomes cheaper to buy electric taxis, you've eliminated the noise and pollution entirely.

  A license shouldn't be sold. I cannot sell my driving license.

There are different types of licenses. The driver is still licensed: e.g. in NYC they need a "New York State DMV Chauffeurs License" and they can then apply for a "New York City Taxi Driver license", which includes a standardized course and exam [1].

The taxicab medallion licenses are separate: they are not a license to drive a taxi, they are a license to operate one.

The licenses relating to peoples' competence cannot be sold, but the ones relating to operating a taxi can be.

[1] http://www.drivers.com/article/1162/

Nonetheless, if the purpose of a license is to verify that a particular person or business entity has satisfied some regulatory requirements that allows them to engage in the licensed activity, the ability to sell that license to other unverified persons or entities would seem to defeat the purpose of having a license in the first place.

If there's no regulatory requirements, then license is basically just an access fee to gain entry to a market artificially closed off by the government. It's just cronyism. What is the benefit to the public if the license is not providing some assurance of suitability of the license-holder?

  if the purpose of a license is to verify that a particular person
  or business entity has satisfied some regulatory requirements

That's not always the purpose of a license. In some instances, the license is to regulate access to a particular activity or device (e.g. gun licenses, or driving licenses).

In some instances it's simply a tax on an activity (UK TV license, UK road fund license).

In some instances, it's to manage a resource (fishing quotas).

  then license is basically just an access fee to gain entry to
  a market artificially closed off by the government.

That's not necessarily a wrong thing. In the case of fishing quotas, it's to ensure that use of the resource is sustainable.

I wouldn't argue that it's correct to apply that thinking to the medallion system - after all, I'm not sure the NYC population is going to be 'fished out' by an oversupply of taxis - and if it's to ensure a floor on taxi income so that the taxis meet a certain quality, then there are better ways (e.g. regulation) to do that.

I don't see that the sale of medallion licenses is an issue per-se, but that critiques of license-sales are essentially critiques of the medallion system itself.

Let's all remember that prices are plummeting in the face of rides that are heavily subsidized by venture capital firms, by one account to the tune of 60% of the cost of the ride.

I'd also like to know what drivers make in NYC cabs (individual and vis a company) vs Uber vs Lyft, both gross and adjusted for car/fuel costs.

I've lived in some cities where Uber drivers were mostly former taxi drivers who made more with Uber, but I've also lived in places where Uber cut driver income over several years and none of the people I rode with started out as Taxi drivers (and therefore couldn't tell me if the income was comparable).

I agree, Uber doesn't have a great track record of playing fair.

It's really hard to tell because Uber's released data is kind of sketchy [1] and there isn't good aggregate data for the taxi market. You can look at individual stories like [2], though. Anecdotally, if you want to do it full-time, taxis used to pay significantly more, mostly due to tips, lower maintenance costs, and more efficient rides. Competition from Uber and Lyft have depressed taxi income recently, though, so it's no longer clear which is objectively better.

[1] http://www.huffingtonpost.com/2015/01/22/uber-drivers-pay-st... [2] https://skift.com/2015/08/03/taxis-vs-uber-in-nyc-according-...

From an opinion piece in 2012 — http://www.nytimes.com/2012/05/26/opinion/they-are-taxis-not... — drivers made around $113/12 hour shift after paying the rental fee (also $113). There was a related news article around the same time (this was in discussion of a fare hike) but I can't find it.

Typically drivers who rent a taxi rent by the shift and must pay their rental fee upfront. There are ghost fleets of taxis queued up at garages in Brooklyn and Queens since so many drivers have dumped medallion cabs for driving for Uber/Lyft/etc.

Not the article I was looking for but from the Atlantic in 2012: http://www.theatlantic.com/national/archive/2012/05/hidden-c...

Really? Aren't Uber drivers paid a % of the ride cost. So they are not being subsided. And I know Uber are not profitable but I imagine they could be the day they want to. The cost of infrastructure they maintain would be fairly low when they move from a growth to cash-cow strategy.

Seem to me VC's are subsidising expansion within new markets and ventures, not the rides and this 60% figure is misleading.

The problem is the prices are artificially low, and if Uber suddenly pulled out the subsidies on rides there's no guarantee ridership wouldn't drop significantly (especially in markets where Uber and taxis are still in fierce competition).

(And by artificially low, I mean rides are being sold where the driver is paid more than the passenger paid, with VC money covering the rest)

Are drivers paid more that they earn? Maybe in a couple of newer, high competition markets like china but I dont believe this is the case across the majority of the world.

Right now anyone can get something like 50$ of free rides for starting anywhere, and even after that I've taken rides where the driver told me how much they were paid and it was more than what I paid.

Uber doesn't have driver incentives nor any competition in Toronto and it's still less than half the price of a cab.

Because Uber are trying to corner the market, and switch over to lower cost driverless cars. They'll get us used to using the app, getting data on where people want to actually go, and then switch to automated cars because it will be easier and cheaper to do so.

Sure, but cab medallion prices are a function of the artificial scarcity created by their existence in the first place. If you removed venture capitalist subsidies, but kept Uber and Lyft in business (companies who do not artificially constrain the supply of their drivers), the impact on medallion prices would be the same.

Assume this is true.

It's not exactly a market with a high barrier to entry. I have trouble seeing how, even if they put everyone out of business, it wouldn't just pop up again pretty much instantly.

Heck, some other vc firm would probably just fund that

So what exactly is the downside to this?

It seems like subsidizing the price of breathing air.

(and they couldn't do something like put everyone out of business, then buy all the medallions, stop anyone else from competing, because the second they put everyone out of business, now they will have the fun spectre of massive antitrust issues for everything they do!)

So what am i missing here?

I'm not saying much more than I'm actually saying. Uber subsidizes fares. Those subsidized fares are putting pressure on cab companies. When we ask ourselves how we feel about cab companies being squeezed, we should consider that this isn't a natural state of affairs; it's a distortion of the market by speculators, and probably can't stay this way.

I'm probably in the minority, but Uber's fares aren't what make me prefer them over traditional cabs. The up-front pricing, which limits scams, is a huge plus. And the lack of ability for drivers to discriminate against minorities/destinations is also a huge step forward.

Even if Uber eventually raises prices to what cabs currently charge, it will still be a massive improvement. The schadenfreude I feel when seeing cab drivers struggle has little to do with their prices and more to do with the abusive antics they made us put up with when they had a monopoly.

Uber doesn't charge up front. You get a suggested fare, but the actual fare isn't guaranteed to be in those bounds.

Uber drivers also aren't guaranteed to go the optimal route. More and more Uber drivers seem to ask me what route they want me to take (which given I usually use Uber when abroad means my answer is almost always - whatever the GPS says).

If/when self driving cars come in, obviously these problems will disappear...

Maybe it depends on the city but in Toronto and SF the rate is guaranteed unless you tell the driver to take a longer route or make stopovers or you change the destination mid trip.

(I'm a part time Uber driver and I'm familiar with the menu options for disputing a fare due to stopovers or strange route requests)

The bit about minorities is pretty tenuous. For instance, in Chicago, Uber's service and fares maps cut off the south side of the city; if you undertook a map of white people and where white people want to go in Chicago, you'd end up with that map.

"Uber's service and fares maps"

Are you referring to a literal service and fares map that exists somewhere on Uber's website? If so, I'd love to see it.

In my experience in Houston/Austin Uber is a superior product.

Uber pick up times 15-30 minutes. Taxi pick up times 30 minutes - 6 hours(bad neighborhoods)

Never dealt with a rude Uber driver. Routinely dealt with rude Taxi drivers(usually not to me but to my wife)

I'm not friends with anyone who was sexually harassed or assaulted in an Uber but plenty of them were sexually harassed/assaulted by Taxi drivers.

As long as all the cab companies are put out of business, I'm okay with it.

VC subsidy or no, a car service with the medallion capital cost will end up costing more than one without.

Of course, it's unfortunate that a person can end up losing a financial bet -- it can definitely ruin lives.

... but in this case, these things were so valuable because they were severely constricted. Competition was restricted which means consumer prices are higher. Sure, perhaps that's measured in cents per ride, but it was still a tax levied on all drivers going to a small, lucky few.

My guess is that it's more like dollars per ride, on the order of 20-35% cheaper.

There is a good Planet Money podcast on this topic:

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

The best write up I have seen on taxi medallions (and in general one of the best bits of journaliam) is this Globe and Mail article:

https://www.google.ca/amp/s/sec.theglobeandmail.com/globe-dr...

Great article.

Even if the licenses were restricted, if they issued (leased?) by the city instead of sold, the cost wouldn't have been able rise.

The whole medallion scheme just reeked of utter rent seeking. It was just a transfer of wealth from the poor (drivers) to the rich (medallion owners) for no reason. As you state, the city could still have restricted the number of drivers and cars though direct-to-driver licenses without the need for medallions.

There's a reason you see medallion systems mostly in large citys with cronyist political machine type governments.

I thought the original idea was to regulate the sketchy freelance taxis that existed beforehand. The current system of "expensive medallions owned by rich people who then hire poor people to drive the cars for a pittance" is just what happens once capitalism gets hold of a system with poorly thought-out, exploitable rules.

Medallions as an idea to regulate the market is not bad. But the impelementation we see today is the result of years of lobbyism, and to some extend corruption.

If a city needs to regulate the taxi market, and there could be reasonable arguments for that, for instance, ensure capacity at all hours, or during peak periods. A medallion systems works fine, because you can sell a medalion with terms of when to drive. We do it for doctors in Denmark. If you want to practise medicine, you must do a certain level of on-call duty.

A friend of mine's family had 3 of these (father and two brothers) that they'd bought over the years as the whole family had gotten into the taxi business. Medallions were supposed to be their nest egg in the same way many people feel about their house. Sadly, this has taken their whole world for a spin.

If they bet their savings on 3 medalions, they did the 1. thing people advise not to do. Invest everything in one single thing. It's sad, but it's not unexpected.

I think cities should reimburse cabbies if they aren't going to enforce quota restrictions on Uber, etc.

Because it's not right for the banks to lose money on a loan?

If someone invests in a taxi medallion, why are they more worthy of aid than someone who invests in a restaurant?

If someone invests in a restaurant that has a government-granted monopoly and then the government rescinds that monopoly they may have cause for complaint. Or maybe they should have just priced in the risk of a disruptive black swan event.

I think all investments should have risk, and if the government bails people out then there's all upside and no downside, why wouldn't banks exploit that financially to the extreme?

I think it might be desirable to take out insurance on the asset though as a buyer. It could be an interesting market too.

Betting on a government-granted monopoly is still a bet. Just as if I bought stock in a company that thrives because it has a patent that may or may not be overturned on appeal, or a monopoly that might be smashed due to an anti-trust action.

Investments often result in money lost, that's life - as someone that's been in the market for decades now, yes, I do think it's on you to be aware that black swan bubbles exist, and you'll get wiped out if you're all-in on one when it pops.

If you can't handle the risk of your investment going to zero, hold low-yield bonds, cash, or gold.

Banks hardly lose money on loans, they have an infinite capacity to go after delinquents. Try to default on your loan and see what happens to you. You'll be a slave of the bank for the rest of your life.

Of course, individuals bear no such power. So please don't use banks as an example.

> Try to default on your loan and see what happens to you. You'll be a slave of the bank for the rest of your life.

Bankruptcy exists almost entirely to offer protection against this exact scenario playing out.

As long as the debt in question is not a student loan, which usually survive the bankruptcy.

"Usually" is quite correct. You basically have to prove there would be no hope of being able to pay it back without severe financial hardship, and the bar for hardship is fairly high. Even when some student debt is discharged in bankruptcy, it's often a partial discharge.

On the contrary, banks have departments dedicated to estimating the amount they will lose from bad loans. It's expected.

Well the city wasn't the one that sold them for so much money, it was the aftermarket that drove them up (because essentially no new ones are being issued).

A refund wouldn't do much and in general if you buy an asset that decreases in value you have only yourself to blame. Medallion owners are no more special than anyone else.

I bet if you followed the money you'd find some very wealthy city councilmen or bureaucrats who were in charge of determining how many medallions to issue.

And I bet if a reimbursement program were put into place, most of it would mysteriously not go to the cabbies themselves.

Some cities auction them...

The drivers can work for Uber, and arguably earn as much as they did before. It's the medallion owners who are out of luck.

> The drivers can work for Uber, and arguably earn as much as they did before.

That's not my understanding. I've read that they earn less, and drivers I talk to say it's hard to make money. Also remember that Uber drivers are contractors and get no benefits or other employee protections. Uber does place plenty of stories and op-eds saying otherwise, but I need to see some actual data.

Yes, data would be best. Maybe it's hard to make money as an Uber driver. But driving cab is not such a great job either.

> driving cab is not such a great job either

Many things are 'not ... great', but some of them are much better than others. Homelessness isn't great, neither is a low-wage job and public housing, neither is a decent paying job with an awful boss, neither is being a graduate TA at MIT for an awful professor - but some of those are clearly better than others.

The drivers I've spoken to mostly thought that Uber's entrance into the market had hurt their incomes significantly. Of course, that's hardly a representative sample.

Many cabbies are also independent contractors and thus get none of the benefits Uber and Lyft are assailed for not providing. It's not always the case, but it's not exactly unheard of.

Now we have to pay more taxes to reimburse monopolists who gouged us for decades because they can't gouge us any more?

Pretty sure this will be a Trump executive order soon.

Good: every dollar of medallion price is a dollar of anticipated price gouging, of ripping off the consumer.

The entire taxi medallion nonsense has always pissed me off. I'm glad Uber and Lyft exist even though they come with their own set of problems. I personally am delighted to see these medallion prices plummeting. The entire concept of them was to use government force to say who has the right to work when and where. It has always been a very draconian thing. Companies that buy these medallions or individual cabbies that put money down toward a loan have all, for the longest time, operated under one simple premise - that the city they live in would protect their investment by strongarming anyone who tried to shake it up.

Here's a good article: http://nypost.com/2016/07/05/city-lets-uber-and-lyft-canniba...

I don't feel bad for anyone mentioned in this article. "It was a good investment, on a yearly basis, averaging about 10 percent of the value, we were counting on that,” said the Peru-born Hervias, 57. “I told my kids I would give them each $200,000 for college." So this guy tried to leverage his licence to conduct business in NYC into paying for his house as well as not one but multiple college educations?! You must be joking. And they expect me to care about this sob story? And how about this woman: "She went to a recent TLC meeting and demanded that the city buy her medallion back from her at the price she paid for it plus interest. 'The city has its hand in the revenue grabbing on the back of medallions owners who were told this was an investment that they could own and control to be profitable,” said Robinson. 'That’s not only a lie. It’s corruption.'" I'm sure she would have considered it corruption and lying if she was able to continue to profit from government force, right? Uh, huh. She only has a problem because her "investment" turned sour. She expected the government to guarantee this so-called investment by the city dropping its iron fist to force people like Uber and Lyft out of the game.

What ever happened to trying to lower the barriers of entry to support competition? Anything as simple as a one man operation in a vehicle that has an up front cost of over $1 million is clearly not competitive and totally protectionist by design. Plus, the city sets rates so there isn't even competition in the industry. I know, I know, it's for "consumer protection" because tourists were getting screwed. Uh huh. Look, I'm sure that's an issue in every city, but not having competition is a terrible idea. The government should not be setting prices.

Whether you wait for the defaults or not, Medallion prices will be a good investment as Uber et al are eventually forced set prices above costs.

Was there any way to make money on this?

Medallion CDS?

Can we still do it? Who would be a counterparty lol

Great! Less money to the government, less problems for the people!

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