Chicago taxi industry sliding towards collapse
usatoday.com
usatoday.com
The "personal transportation" market has massively changed. Whether it's for the better or worse simply doesn't matter.
Veteran Chicago cabbie John Aikins,67, who is facing
foreclosure on two medallions for which he owes more than
$330,0000, said he has little hope that the industry can
be saved.
"It feels like the city is just watching us collapse,"
Aikins said. "Right now, there are a few people, the
elderly and some others who refuse to take Uber because
they are uncomfortable with it, that keep us going. But
how many of those people are out there to sustain us?"
I'm firmly behind Judge Richard Posner: "Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt."
The medallions give "the exclusive right to pick up passengers who hail them on the street". But that's just happening as much. But even "the elderly" are likely not going outside (in Chicago) and sticking their hand out. They're being dispatched, where you wouldn't need a medallion in the first place (right?).
They are. There are many active elderly people in Chicago.
http://pix11.com/2017/06/07/nyc-taxi-king-accused-of-failing...
Now some medallion owners are trying to get gov't money to bail them out:
https://www.scribd.com/document/346690906/Letter-to-Governor...
Yikes- I have only a little sympathy for the taxi industry, but it is very scary that you do not believe we should be concerned with whether market forces improve society or not. I think it is extremely important to the vast majority of people that any enormous change in transportation occurs for the benefit of society - the ideology that capitalism is an end into itself is extreme and fringe, and we shouldn't be afraid to call it out as such.
Except pharma, telecom, energy, airlines and one or two others...
I am not sure who would like taxi industry to pharma?
Also public transit, car rentals, etc.
Car rental because you have to pick up the car and later drop it off and the costs are significantly higher than a taxi, and public transportation because it's slower, more crowded (therefore more difficult with luggage) and doesn't always go directly where you want to go.
On a city-wide scale you can't expect car rentals and public transportation to be a valid replacement for a taxi/taxi-like service.
I love that I live in one of the few cities with a train that leaves directly from the airport.
(I now wonder how many others I don't know about from personal experience!)
> and who do you think is paying for your cheap Lyft trips?
Mostly my own contribution, and partially VC money.
1. http://www.cnbc.com/2017/01/12/pipsqueak-lyft-could-reach-pr...
People always claim this will happen, and it never seems to. If Uber tripled prices, a competitor would start up to cut into their market share.
I'm not concerned with the price of rides increasing, I'm concerned with the unemployment our country is going to get punched in the face with. Between cab drivers and OTR (truckers), we're going to have a MUCH bigger problem on our hands than we've seen since Detroit collapsed (which was arguably less of an issue since it occurred over a longer period of time).
Uber will run out of money long before we have self-driving cars.
This is a very good point. Also consider that many more people need help with groceries than with luggage.
Heck, with amazon groceries and other similar services, why do they even need to go to the store?
As for "at their home" - if you think that the cross section of elderly people who:
Can't lift their bag into a car.
Travel frequently.
Have no friends or family to help.
Have no neighbors to help.
Don't live in assisted living.
Is enough to sustain the industry, I think you're in for a rude awakening.
Self-driving would take away a big chunk of that market, but estimates vary on when that becomes a reality. With every major technology improvement, there were massive employment and social shifts. Wars and revolutions were often side effects. However, I don't think the percentage of the population engaged in the taxicab and trucking industries are enough to destabilize society. By its nature, the employees in that business are often transitory. Perhaps there will be legislation to force self-driving vehicles such as taxicabs and commercial trucks to keep a human "driver" to supervise and assist when the vehicle gets into situations outside of its programming.
Due to Uber's network effects you could say they'd have even greater power to change prices dramatically. Let's say Uber became the dominant transportation network in a particular geography and then trebled prices. Any new competitor has to both lure riders and drivers from Uber. Riders, sure they can be lured by cheaper travel but drivers want to earn the most money. Uber could simply double how much they paid drivers. All the existing drivers (and any new drivers) would rather work for Uber and get paid more. In fact they would have a vested interest in seeing the competitor fail.
1: https://en.wikipedia.org/wiki/Phoebus_cartel
2: https://en.wikipedia.org/wiki/Bell_System#Nationwide_monopol...
3: https://en.wikipedia.org/wiki/General_Motors_streetcar_consp...
Bell System ended up being heavily regulated, and it's service was second to none. It was nearly a natural monopoly because of the cost of running phone lines. If Uber ever became that, we could resolve any problems with regulation.
But in reality Uber can never become a natural monopoly, entry into their market is too easy and just gets easier over time as costs decline for systems development/operation.
What will happen if they succeed is that Uber will become a valuable brand, people will prefer it, and other competitors will be forced to compete solely on price. So far brand building is something Uber is struggling with.
I think it's unlikely that the current political climate will allow such problems to be solved with regulation.
Politics is politics. I was just re-listening to Dan Carlin's podcast series on the fall of Rome. He starts with the Graccus brothers, who were populists. Rome had an elitist power structure, basically the founding families controlled the senate, with the Equestrians and Plebes below them (and slaves below that).
The Graccus brothers got themselves elected Tribunes, which were roles intended to check the power of the senate, and took those roles to push forward land and other reforms to check the power of the senate and give things to the middle class and poor (some would say to buy the mob).
To stop this, the Senate at one point recruited their own Tribune candidate, and he didn't promise to rollback the Graccus reforms, in fact he did the opposite. Instead of giving away land for cheap prices to the Plebes, he offered them free land. He offered even more bread subsidies, and instead of the state paying for a foreign colony for the plebes, he offered to pay for 12 of them. And he got elected to replace Gaius Gracchus.
All politicians are sensitive to where the wind is blowing and most try to take advantage from it.
Uber's service costs pennies per ride to provide, drivers pay them dollars per ride to participate. There is almost no chance Uber can't be profitable at current prices. The only question is whether prices need to rise to ensure a decent supply of drivers.
There's some truth to that: whenever I bother to check I find that Amazon is no longer price-competitive with brick-and-mortar.
> If Uber tripled prices, a competitor would start up to cut into their market share.
...unless there's no actual profit at anything less than 3x the current prices. Isn't Uber running on a VC subsidy right now?
3x the current prices would put us at roughly what taking the cab looked at before Uber cost-wise.
Answer is they provide great rates for passengers - see all of the anecdotal evidence here - and great pay for drivers.
It literally is "too good to be true."
It's just an app--with a $20B valuation and about as much in free cash.
The genie is out of the bottle.
My guess is they are spending a lot of money expanding. Once done, they will be instantly profitable.
I live in Chicago, and I don't know if Lyft and Uber are a social good, but taxis were too expensive for me, and now I have another affordable option for transportation. Plus all of the drivers I've spoken to seem pretty happy with their new source of income, so it's mostly the city and medallion owners that are losing out. The city can take action to help ease medallion owners out of the industry without defaulting as the demand continues to decline, and drivers are completely qualified for the ride-share industry. As far as disruptions go, this one seems pretty agreeable (I don't have much sympathy for the bureaucrats who are stuck between raising taxes and rooting out corruption and mismanagement in order to make up the difference).
There's a lot of people who would disagree with you. They are called libertarians. What matters first and foremost is freedom - individual freedoms should not be overridden for the sake of improving society.
All that's going on here is that cabbies made a bad investment and are losing. Sorry, but if you're tying up 90% of your wealth in a single asset, the value of which is 100% dependent on fickle regulation, and you didn't see this coming a few years ago, I don't have much sympathy. No prudent financial adviser would recommend this, and further, if you were so exposed, you should've been paying attention to what's happened in the industry over the past, I don't know, 8 years?
Similarly, easements don't go away when they change buyers. For example, if you own a landlocked property, and you have an easement with your neighbor that allows you to drive across his property on his private road to reach yours, and then the neighbor sells his property, you can still use that road - the new owner cannot say "tough luck."
Market forces are naturally driven by customer demand and the realities of supply costs. Government intervention/subsidies is the only thing that interferes with that process, and almost always that intervention is being driven by self interested actors looking to reap above market profits.
You may not like what customers want, but that doesn't mean it's not better for them.
I don't want - Drivers that drive like maniacs. Drivers that spend the entire ride on a phone call to god knows where. Drivers who lie to me and tell me they can't accept my credit card.
However, it seems to be conflated that the alternative to that can only be people using their private cars that don't necessarily know the area they're driving in and are by no means professional drivers working in an ill-defined "non-employee"/Employer relationship with Uber.
For what it's worth, in New York, that's not your problem if they tell you at the end of the ride. By law, if a card reader is broken, they must inform you of this at the beginning. None of this "ok, I take you to ATM" business that tacks on a few more bucks onto the meter.
Pretty much any actual customers of ride-sharing services such as Uber and Lyft have already answered that question adequately for themselves. No one else's opinion -- not yours, not mine, and damned sure not the taxi cartel's -- is of any importance.
That doesn't mean there aren't risks, of course, especially for those who think the cheap rides are going to last forever. If government has a legitimate role here, it will come into play when the VCs get tired of subsidizing said Uber and Lyft customers. The taxi medallion business may be dead, but it won't be buried for good until the ride-sharing industry is genuinely self-sustaining.
(Does Chicago buy back the medallions, or do you have to have to sell them to someone else? Is the 300,000 the market value he paid to someone else, or is that what the city charges?)
The US government bailed out the banks in 2008, and all those people at the top got to keep their millions while so many people lost their homes (mostly due to fraud). These people watched their industry change while being locked into a sinking ship .. unable to do anything about it. These people need a bailout.
That's the thing though, they don't. And why would they? These cabbies made a bet that the medallion would not lose value until they sold it, and they lost that bet. How is this different from any other small-time business going bankrupt?
The analogy holds: A city government had a system where a good had artificial scarcity and intrinsic value from stable government policy. Then, it suddenly changed. I'm all for ride-hailing changing our public transit dynamic, but I can't fault the players of the old system too much for saying "What the hell about my retirement, my end of life?"
These kinds of markets have some interesting dynamics - carbon credits have similar issues. Basically, the government can set the initial price (because they artificially create the entire supply) but then the market takes over. It's very difficult for the government to set the initial price correctly (i.e., close to the eventual market price)
I seriously doubt that there's an easy mechanism for cabbies to get the city to pay the pre-uber market price for their medallions. They would probably have to sue, claiming that the medallion gave them a guaranteed monopoly that the government failed to uphold. That will turn on exactly what rights the medallion is supposed to entail.
The fact that medallions, which originally cost far less than $300,000, shot up to that price is solely because of the money they allowed you to grift from chicagos citizens. Now you think those citizens should be punished again to pay more taxes in order to redeem the speculators medallions at their highest historical price?
My guess is that if medallions changed hands at $300K, that meant that they could be leased out to cabbies for over $30K a year. That's the monopoly profits the system created for them.
We never should have bailed out the banks without much harsher terms. But politicians were worried about financial collapse. There is no worry about that here, this is objectively good for the economy and the country.
The fact that medallions, which originally cost far less than $300,000, shot up to that price is solely because of the money they allowed you to grift from chicagos citizens. Now you think those citizens should be punished again to pay more taxes in order to redeem the speculators medallions at their highest historical price?
My guess is that if medallions changed hands at $300K, that meant that they could be leased out to cabbies for over $30K a year. That's the monopoly profits the system created for them.
We never should have bailed out the banks without much harsher terms. But politicians were worried about financial collapse. There is no worry about that here, this is objectively good for the economy and the country.
It's the last two paragraphs of the article.
Uber generally broke car service laws by not requiring their drivers to have the local registrations.
Uber scaled fast while ignoring local regulations. Both parts are important. We've seen from e.g. Zenefits [1] that state regulators are powerful. Local regulators, on the other hand, are slower moving.
Previously, a disruptor might assemble a few happy customers before the regulators slammed down on them. Uber's ability and willingness to scale fast changed that. By the time the local regulators were ready to slam down, entire cities of constituents wanted and liked the service. That changed the political calculus. Uber, and consumers, won.
[1] https://venturebeat.com/2017/04/11/zenefits-fined-1-2-millio...
>What prevented someone from operating a for profit ride program even before Uber without a medallion?
Nothing and lots of companies do it.
Uber and Lyft rides are also investor subsidized, and that is likewise market distorting.
The city of Chicago, like many other cities, simply doesn't know what to do. They lacked the knowledge and/or the courage to either regulate Uber and Lyft etc just like taxis; or end the taxi monopoly and take some role with handling the total collapse of the medallion market (partial buy back perhaps).
But any of these meallion owners should investigate a hair cut negotiation with their lenders or talk to a bankruptcy attorney. There is no good reason for these people to be in debt on a useless asset. It's every bit as much their mistake to loan, as it was the lenders mistake to lend.
The only difference between uber and these other car services was the ease at finding a car.
Medallions owners ripped off people in Chicago long enough. They should sow what they reaped.
If the cab business becomes a free-for-all, there will be no one waiting at the airport at 3:00 AM. Granted, there isn't a lot of traffic at certain times, but the public interest is best served when there are always cabs available.
However, for this scenario, why does a cab company need to take on this risk? Why is the risk of not having a cab at a cheap price not borne by the person who needs it at 3AM? This seems like a problem that is sufficiently solved by the market, where cabs will charge appropriate pricing to make it worth their while, and if another company finds they can correctly price their fares so that they can offer the same pricing day and night, then customers will choose them.
I guess it matters to those upon which the worse is imposed.
By that, I mean not only the taxi drivers. From an individual standpoint, those who get to drive for Uber are happy to get jobs, but looking at the problem at the scale of the workforce, replacing one jobless man and one well-paid man by one less paid man and a jobless man is a net loss.
If you see a taxi company as some kind of employer of last resort or an unemployment benefit without the shame, then perhaps it's a net loss, but why not just call a benefit a benefit and hand out cash to un/underemployed people. If you have to take a pound of flesh to prevent abuse, then have them break rocks or something to earn their payments.
Well, ~10,000 people, mostly male, are going to be left not only unemployed, but heavily indebted. That combination cannot be good for social stability. If you are a resident of Chicago, you should care. This problem won't go quietly into the night.
> The government in no way insured that medallions would be a winning business investment.
People who recently took out loans to purchase a car to work for Uber are going to be facing the exact same problem if and when they roll out their autonomous fleet. That's around 200,000 nationwide.
I care about these things because I want the society I live in to continue to be relatively peaceful. And America is certainly well equipped, there are as many guns are there are people. Situations like these are how bloody revolutions start. Everyone has fears about AI's running amok. I fear what people will do when AI's take their jobs.
But it's not 10,000 people. Lots of those medallions are owned by businesses, and they leased the medallions to drivers. Most drivers can switch to Uber/Lyft if they have or want to buy their own cars, or get other jobs. Driving a cab wasn't lucrative, the owners of the medallions were the ones reaping the monopoly profits.
The best part of the shattering of these monopolies was the lesson it gives others investing in government shielded businesses. Hopefully they will fear their own bankruptcies soon.
> Most drivers can switch to Uber/Lyft if they have or want to buy their own cars, or get other jobs.
Although some of them can probably use their primary car for Uber/Lyft, many of them will have to take out a loan/increase their debt to get a car they can use for ride-hailing. Perhaps you aren't aware, but losses in sub-prime auto loans have reached their highest levels since the 2008 financial crisis. Given that taxi drivers make on avg about $35,000, it's safe to assume that many only qualify for subprime and will add to this problem. And this is happening all across the country.
To your other point, get another job: Doubtlessly some people will be able to retrain. Just as surely, a number of people will not be able to adapt. Being a driver is about as low skilled as labor gets, so there are hardly any where their previous experience can transfer. So what jobs? Retail
> Driving a cab wasn't lucrative, the owners of the medallions were the ones reaping the monopoly profits. The best part of the shattering of these monopolies was the lesson it gives others investing in government shielded businesses.
I don't really care about the superiority of dynamic startups vs government shielded monopolies and honestly I think the financialization/commodification of parts of the economy such that people make bets on things instead of contributing productive value is not a good thing. But I digress, I'm more concerned with the shattered pieces left over in the creative destruction. 9500 formerly employed people with little future job prospects. That is .2% of working adults. It's not a huge amount, but it's not a drop in the bucket, especiallly when the city is again raising taxes and these individuals are going to need government assistance.
As us in the tech industry innovate and move forward, we aren't following the patterns of the past. When software eats industries, it destroys jobs a magnitude more than it creates. Let's be clear, coal isn't coming back and neither is manufacturing (BTW, the US is still the world's 2nd largest manufacturer and the leading advanced manufacturer, a fact that goes unnoticed) I personally don't find meaning or validation in life by having a job, but many do and UBI is a stopgap at best, but we really don't have any other solution at this point. That's what scares me....and people making rhetorical, ideological rants with no regards for facts.
[0] https://en.wikipedia.org/wiki/Taxicabs_of_the_United_States#...
[1] http://www.chicagotribune.com/news/ct-chicago-taxi-driver-de...
Subprime is less than 20% of car loans, because it's easy to get a car loan if you have good (decent, not great) credit. Car loans are relatively safe because they are collateralized. This is why my bank is offering new and used car loans at 1.99%, and manufacturers/dealers can offer even lower rates. Even with poor credit you can get loans for less than 10%, which is fantastic by historical standards.
Even for the drivers who have terrible credit they can get still get a subprime loan and keep driving. Even at absolute worst case 20%, that's $6,000 a year, about $3/hour for a $30k car being used full time for Lift/Uber. Leasing a cab from a medallion holder for one shift a day probably cost close to $10,000 a year. In the case of the sub-prime loan you can refinance when your credit improves or pay it off over time. The Medallion lease costs were forever. And the driver likely can get higher utilization with Uber and Lyft than they ever got with their cabs, so they should be able to make more money.
Had taxi company owners not used those medallions as an excuse to provide absolutely horrendous customer service, they wouldn't have ever had to worry about uber/lyft/whatever in the first place. I've never taken uber or lyft because it's cheaper, I've taken it because I get a clean, comfortable ride, with a driver who isn't a complete jerk. I've mentioned it here before, but also why I won't take uber anymore unless it's my last option - their CEO has the same attitude I saw in those taxi drivers and I'm not about to give monetary support to "that guy".
NOTHING the government did has EVER prevented cab companies from providing the same service these startups provide.
This is the wrong analogy, for trivially obvious reasons. As I'm sure you're aware, the drop in value of taxi medallions wasn't contingent on the owner being a bad driver. Put plainly, even a driver who went above and beyond to provide honest, high-quality service was affected by the drop in values. To put it yet _another_ way, the fact that many taxi drivers provided shitty service couldn't be less relevant.
Your analogy would only make sense if it was talking about an entire apt block got condemned due to multiple slumlords, including the apt owned by the guy who kept his property up to code and livable.
Neither this nor the fact that the regulatory regime was horribly flawed change the fact that many drivers got screwed through no fault of their own because gov't policy was incompetent enough to create bad policy and fail to sustain it.
Economic ownership of real estate as property is pretty bad economic policy too (cf Georgism) but that wouldn't change the fact that suddenly implementing a 100% LVT would 1) be infinitely better policy and 2) screw over an awful lot of people playing by the rules of the previous system, through no fault of their own.
There's an important clarification here: Taxi drivers did not get screwed. It's medallion owners that got screwed. Yes, some of the drivers actually own their medallion, but many (most?) do not. Those who do not own their medallion didn't really get screwed, not more than anyone who gets laid off or has to change industries anyway. Many of them are simply driving for ridesharing companies now.
The medallion owners who got screwed do partially have themselves to blame, because they saw the outrageously inflated prices for medallions and chose to pay them anyway. It's like the mortgage crisis; at least some of the blame goes on the people who saw the absurd prices and chose to pay them anyway, and then got left holding the bag when the collapse hit.
> Taxi drivers did not get screwed. It's medallion owners that got screwed
Right, good catch, I wasn't thinking about that fact. That's not central to my point but it is a good point to clarify.
> The medallion owners who got screwed do partially have themselves to blame, because they saw the outrageously inflated prices for medallions and chose to pay them anyway.
This doesn't make a whole lot of sense to me. What is the "true" value of a taxi medallion, in a regulatory context where the government is setting the supply? If we implement [insert optimal healthcare policy] and (hypothetically), doctor salaries drop precipitously, are doctors to blame for seeing how "outrageously inflated" med school tuition was and choosing to pay it anyway? Should they have stayed out of the field entirely until healthcare policy in this country is perfectly optimal?
For the life of me, I'll never understand the lack of empathy required to see someone get screwed by unstable rules and conclude "well, it's your own damn fault: you should have been born one of the X-Men, with the ability to predict the future perfectly and realize that this particular inefficient policy regime was going to be disavowed at this exact time". Providing a stable legal framework is one of the most basic and most important jobs of a gov't, and making changes like suddenly deciding to stop enforcement of policy that the industry has been dealing with for decades is what legal scholars call "a dick move".
Here's another example which might be more directly relatable: if you buy a house in California and Prop 13 gets repealed or if you own real estate anywhere and our idiotic policy regime around real estate gets fixed: you'd suddenly lose a huge portion of your life savings, but you'd have yourself to blame because "you saw the outrageously inflated prices and chose to pay them anyway"?
Bear in mind that even if you were intellectually consistent here and agreed that those homeowners are to blame, that would be terrible advice for the literally centuries' worth of landowners/homeowners in whose lifetimes real estate policy wasn't made efficient or fair, and real estate value growth accrued to arbitrary people through rent-seeking.
[1] Not that that's a bad thing necessarily
You can compute the present value of the total profit you can expect to earn (average fares less expenses including the medallion) and if it's less than what the medallion costs, the medallion is overpriced.
This isn't what we're talking about here. That's the equilibrium market price of the medallion, but the person I was responding to was saying that the overinflation due to supply restriction through gov't policy (i.e. medallions) was what was causing market value to diverge from "true" value. The fact that his goal is basically unreachable is sort of my point: his definition of "true" involves an ideal world in which taxis are optimally regulated.
The lack of empathy stems from the behaviour of medallion owners. They're right up there with patent trolls in their unlikeability. They purchase access to a government-granted virtual monopoly and use it to extract rent from hard-working people. They form industry associations and use their profits to lobby the issuing municipalities for rate hikes and other laws that help them squeeze the drivers for more money. They produce nothing and the capital they own has zero intrinsic value.
Frankly, I struggle to see what there is to like about them.
I can guarantee you there are plenty of things you do, from not worrying too much about the sweatshops you ultimately buy from to being complicit in the torture of millions of animals that many other people would consider unethical. Arguing that people don't deserve empathy if they aren't fully aware and fully conforming to your code of ethics isn't enlightened, it's just the same old gross "I want to be shitty to people I disagree with" under a thin veneer.
[1] FWIW, I agree with your assessment of how the industry works.
OK - prior to Uber breaking onto the scene, which cab company in Chicago: 1. Provided universally clean cabs.
2. Provided an app that allowed me to easily acquire a cab without having to jump through hoops, as well as gave me real-time info on where the cab was at.
3. Provided an easy method for me to provide feedback on my driver so that they could weed out troublesome drivers.
4. allowed me to pay them without having to go through the trouble of carrying cash.
You know, all the reasons the new services are winning. The fact medallion owners provided a shitty experience is ENTIRELY RELEVANT. There NEVER WOULD'VE BEEN A MARKET FOR UBER, if the taxi companies were holding up their end of the bargain. Beginning and end of story.
I like Uber, I'm a heavy user, and I'm glad they exist. None of that changes the fact that the gov't had bad policy for twenty years and then screwed over the people who decided to operate within the policy regime. I've provided ample examples above: you can't decide that every taxi operator and medallion-holder deserves getting screwed by dishonest gov't without deciding that the same is true of every doctor and homeowner in the country. Hell, you'd be hard-pressed to find an industry _is_ run fully optimally, so you're basically throwing the entire concept of a stable regulatory environment out the window, which is just ludicrous.
Nope. Nope nope nope nope nope.
They were speculators in a bubble market. It didn't matter what percentage of their life savings they used. If you feel sorry for someone who purchased a $300k taxi medallion which had an intrinsic value (the total value a medallion can be used for rental to taxi drivers over X years) which is far less, you are enabling such behavior.
You also have to remember that the more distorted the medallion market, the more the average taxi driver suffers. Taxi drivers, by and large, rent time in a taxi or own a car and rent the medallion. They haven't been able to afford their own medallions for decades, if ever.
Taxis had a "monopoly" on unplanned fares, but "black car" and limo service was competition (and, therefore a price ceiling). The more distorted that the medallion market, the more the other competing services would chip away at their business, diluting the value of the medallions. I'm glad that a product like Uber/Lyft was able to destroy the price floor of medallions.
I'm somewhat saddened that taxi drivers are losing that means of making a living, but it benefits far more people in the US to have a cheaper means of transportation. "Concentrated costs but diffuse benefits." It's similar to the way US textiles, steel, cheap manufacturing have suffered under globalization to benefit the average US consumer household, which saves for more than $2000/year after China joined the WTO.
NPR's Planet Money did at least one episode[1] on "The Taxi King", a guy who built a house of cards by leveraging the equity in some of his NYC taxi medallions to get loans for others. After Uber started to erode their monopoly, the medallion market popped and he's begging the state and federal governments for a "bail out". I could care less about this human piece of trash. Obviously, "the average" taxi medallion owner probably didn't own dozens of them, but I still can't find much sympathy for someone who invests in a bubble product created by a government-mandated monopoly that should have been disrupted decades before it was.
[1] http://www.npr.org/sections/money/2015/07/31/428157211/episo...
Dude.
Feeling sorry for someone else makes you a human, not an enabler.
What if it was the web devs requesting assistance, due to thousands being laid off when said bubble popped - would they be actual people made of refuse then?
You don't sound the least bit saddened, quite the opposite.
Paired with taxi companies taking advantage of people in these situations, you're completely minimizing a complex problem. You should be focusing your aggression to them, NOT the drivers.
Granted I don't believe for a second that's the actual rate and I'm confident the driver was trying to take advantage of me. But with ride sharing I don't need to haggle over price and I know the algorithms are ripping me off less than the taxi driver.
Aren't taxi fares set specifically by regulators in both places?
Things I observed during that time: - A driver stating, seemingly out of nowhere to my friend and I, "we should just take all of the gays out back and shoot them"
- Multiple times scheduling a morning pickup for a flight, not having it arrive, and being told by the uncaring operator the alternative was to wait so long I'd miss my flight, or gamble with trying to find a free cab during rush hour on Belmont (a losing proposition)
- Too many counts to list of the CC machine "being broken" to try to force me to pay cash, including being intimidated at one point to stop at an ATM to get cash to pay
- Having a driver show me the gun he kept under his seat for "driving through the South Side"
- The joy of not being able to ever get a cab during busy events in extreme weather of all types because there was no way to reserve the ride
- Various smells, ripped seats, miscellaneous fluids in the floor mats, leftover food/alcohol/condom, etc.
- A cab driver who picked me up at my home to go to the airport who then kicked me out part way there because I was on the phone with my mother and he refused to turn down his radio when I requested (which is in the friggin 'Passenger's Bill of Rights' posted in the back of the cab). He then loudly threatened me with physical violence once I exited the vehicle. I ended up asking the cab company to not fire him once I complained because I was so scared that he was unhinged, and the last thing I wanted was an unemployed, unhinged angry guy knowing where my wife and I lived
Good riddance. Uber has its own issues, but they have proven what the market wants. And it sure as hell isn't the current cab system Chicago has.
I have used airport shuttle companies, and limousine/livery companies (this was before Lyft and Uber). Both were overwhelmingly cheaper than a cab, and they actually show up on time. When I lived in Chicago, I'd always use the blue line to ORD or orange line to MDW.
Whenever I actually wanted a cab in Chicago, I could never get one. I suspect that was mainly down to my looks. Not so much sketchy as unattractive, and possibly willing to counter the broken card swipe machine gambit by paying with nickels and then forgetting to leave a tip.
And of course there's just something about a vehicle that smells like it was recently dusted with finely-ground cumin that makes me want to walk.
So, no sympathy here. They can choke on those medallions.
I wonder how that would go since CCW permits are legal now.
Or are you wondering whether shostack might have been shot himself?
Anecdotally: as long as I don't go during rush hour (i.e. 7-9am or 4-6pm on weekdays), I can get from anywhere in the densely populated sections of Chicago (basically, anywhere within 5 miles of the loop) to another section for ~$3~5 via Uber Pool/Lyft Line. At that price point, it's competitive with taking public transit.
I'm interning in Chicago this summer and I've already taken pool/line 10 times, each for ~$3~4 and taking ~20 minutes and going about ~3 miles. Uber/Lyft's algorithms for matching riders up is actually pretty good in my experience, but even then let's assume that each driver has two riders per trip, each paying $4 and each trip taking 20 minutes. In which case, they'd have 6 riders per hour for a total revenue of $24/hour before Uber/Lyft's cut and accounting for their own expenses. I refuse to believe they can actually make a living by driving this way.
Having taken many cabs and many rides via Uber, Lyft, and Juno, I'm not sure why you'd claim this. The drivers for ride-sharing services are far safer, saner, and more careful than cab drivers. The reason is not hard to ascertain: at the end of almost every trip drivers and riders rate each other.
Personally, I see a lot of people happy killing all of the problems with taxis (particularly in Chicago) but I fear that we are "throwing the baby out with the bathwater". Taxis in Chicago have a ton of problems, but I still have concerns about ride-sharing too.
My personal favorite is how hazard lights have morphed into "I can do whatever I want, just go around me by veering a car / this 60' bus into oncoming traffic."
One of these days I'm going to start spending one of my days off just standing at a random major intersection and emailing SDOT/SPD and posting on Twitter the license plate numbers of every Uber/Lyft driver behaving badly.
What people don't realize is that once the taxi companies are dead, the ride sharing apps will be able to raise prices and lower quality. Not to mention the issues already seen with Uber and Lyft, whether at a corporate level or on a driver/passenger level.
Really, things seem less corrupt now than they did with Daley so maybe there aren't big payoffs by taxis, just laziness from them and the police.
The rideshare companies are still in competition with each other. The market will stabilize at a price necessarily lower than taxi price, which was artificially inflated by local governments. This doesn't seem like a valid concern.
> whether at a corporate level
Sounds like you're imply that Uber's corporate problems are fundamental to rideshare. Care to elaborate on that?
> or on a driver/passenger level.
Why should I be more afraid of scary driver/passenger stuff with rideshare than with taxis? Do you have some information to suggest that rideshare is actually more dangerous? This seems like fear mongering...
Having $B of investment for an idea that is only a few degrees from "yo" (exaggeration) creates a hated company like Uber. What has Travis done to deserve money like that that a college student making a location aware app with a backend and insurance/financial pool couldn't do? It looks like a black mark on the tech investment engine to me. Only difference might be he's an ahole and they've been selling some moonshot idea.
I can tell you how bad the excessive funding situation is - my bank, Chase, has sent me offers through my credit card for free rides. A gigantic financial institution is providing millions of people with free rides. That is not an advantage that either a homebrew developer or a traditional taxi company have.
In terms of fear mongering, there have obviously been complaints from drivers and passengers alike. You need to consider those as well as true stories and urban legends of cab experiences. If you haven't heard anything bad ever, then you should be skeptical.
In Chicagoland, the number one complaint I have ever heard about cab rides is the price, and that is not an equal comparison to ride sharing apps (because of incredible subsidies, no licenses, taxes, regulations or fees).
When one company or field of companies eliminates another due to fair competition that can be healthy for the market, but when eliminations happen from unfair competition, that is harmful to the market. I never said taxis were great. I just think their extinction would be bad.
qed.
3. I don't doubt there are bad rideshare stories. This doesn't mean ride share is somehow less safe than taxis, hence fear mongering.
5. Drivers seem to love ride share as far as I can tell, so the McDonalds/Walmart comparisons aren't apt, even if I was certain that Walmart and McDonalds are unethical companies.
I don't often leave negative reviews...but that ride warranted a negative review.
If you find yourself around people in their twenties all looking for rides at 3am, call a cab.
People without smartphones or credit cards will have no way of getting individual point-to-point transportation any more. This especially includes old people (who e.g. rely on cabs to transport them to doctors, grocery stores etc), people who do not want smartphones or cellphones in general due to privacy reasons (e.g. tracking by network operators, or not wanting everything they do on their phone fed to Google), and minors who do not have a credit card - when I was young I always had 50€ in cash with me so I could fetch a cab home when public transport failed.
Also, there are many people who do not want to use Uber, Lyft etc. for ethical or other reasons - it is unclear if the driver has proper insurance for his vehicle, it is not regulated how long the driver has been behind the wheel (it's easy to end up in a crash when driving tired, I speak from personal experience), it's not regulated how much money the drivers make (owner-operated businesses usually don't fall under minimum wage regulations) and for what it's worth it's not guaranteed that the vehicle is technically fit to be on the road (which cabs usually are, with yearly inspections by independent auditors in Germany, for example).
If we go down that path are the south american drug cartels just ahead of their time.
Combined with the supply of cab labor, that had the effect of, "if you want to operate a cab, you need to buy one from an owner at the current absurd market price".
Isn't it ironic that taxi drivers having gone in debt to buy a medallion are now financially destroyed by a company spending more than it takes in? Medallion asset bubble destroyed by Uber valuation bubble.
Having predictable pricing so you don't end up paying 5x more when there is a major event on (aka price gouging) is a bullshit law that needs to be broken?
but it does not. taxi drivers are mega sketchy, to the point where id be very worried if my gf or future children had to deal with them.
beyond their sketchyness, they act entitled to a point that is just not respectable.
apparently, you think their pricing is regulated, which its not. whats regulated is their pay per time. to jack prices up, they take bullshit routes, which not only wastes my money but my time on top of that.
if surge pricing guarantees that i will get a ride (at a higher price) then im all about that. sure, it incites peasant rage when other people have to not compete for rides becuase theyre priced out of it. big deal.
uber and travis may be a shitstack, but theyre a shitstack thats vastly less shitstack-y than the taxi industry.
edit: this is actually about background checks? well then, how many uber drivers have rape-murdered passenger so far? how many taxi drivers did?
the price gouging bit is entirely retarded. surge pricing happens to control the demand. when i need a ride and cant get one because the comic con happens and a million teenage weebs need a ride, i like having the option of getting one guaranteed - at a higher rate.
This brings us to: health care, banking, mobile phone networks, electoral systems, and now taxis.
Meanwhile the civilised world has regulated taxi systems that work, where you know what you'll pay, regardless of what's going on, and you don't have a company with a penchant for being shit lords knowing every trip you make, and doing shit like charging you more because your phone battery is low.
> surge pricing happens to control the demand.
Are you delusional? Increased wait times would be sufficient for that, and would make sense: yes we can take you but there is a queue. Those who don't want to wait will find alternatives, and the demand reduces.
> when i need a ride and cant get one because the comic con happens and a million teenage weebs need a ride, i like having the option of getting one guaranteed - at a higher rate.
But it isn't just "an option" it's the only option.
Edit: clarified
you are delusional. i want a ride. when i want a ride, i want a ride. what i dont want is to sit in a queue. uber provides that service by pricing people who are less well off out of taking a ride that they can give to me, while making more money off of me that they would make off of a queue.
they prioritize the customer that spends more money with them, over the one who would spend less money with them. our business objectives are aligned.
sure, a queue would be more fair. the idiot over there pressed the button first so he gets served first. because thats fair.
FAIR. FAIRER THAN FAIR.
go read some more marx.
and dont compare taxis to healthcare. different issues.
btw, i was talking about the german taxi market. which is scary as fuck. dont want any of my loved ones ride one of those taxis.
> But it isn't just "an option" it's the only option.
Its not the only option. There are taxis. Cant afford uber, get a fucking taxi. I dont care. Get into a queue. Huddle under the taxi stand while the rain pours down on you waiting for a taxi. Meanwhile I surge price home.
Youre only pissy because peasants get priced out of a service that is scarce. go read some more marx.
they could offer a VIP button that's 10x as much for the same service too for people like you that like to flaunt your wealth.
There isn't a one-size-fits-all solution. In London, or example, the best taxi drivers are going to be better than the best Uber or Lyft drivers. It's a difficult city to navigate. When I'm there, I'm not even going to consider using Lyft.
Most American cities are much easier to get around in and there I think the lower barriers to entry make sense. When ride hailing services came to Sarasota, Florida, the taxi companies complained and the city did something interesting. Rather than try to regulate the new companies, they dropped regulations on the old companies with the idea that if they find regulations are needed, they will bring them back. It's several years into this experiment and so far it's working well. I think more cities should try a similar experiment.
Mostly, I think the market does pretty well in the hire-a-ride business.
I was in Las Vegas all week and we used both Lyft and taxi cabs. The Lyft rides were the clear winner in every respect. The Lyft cars were newer and cleaner and the drivers were friendly and offered us water and other things. The taxis were older, more run down, and the drivers were aggressive and not very friendly.
In London, professional drivers win on their efficiency and expertise.
Bailing out the banks and GM got me furious many years ago. Imagine if the government stepped in and saved Altavisa / Pets.com, and all the other dot-com boom companies? What good would that have done? Nothing. Let 'em burn and innovation will rise from the ashes.
It's Chicago. The crooked politicians are their own mob. Vice crime may be contracted out to the local gangs, but the rackets are kept strictly in-house.
That way, when you want to buy a senate seat, there's no pesky middleman in the way to jack up prices. You can just go straight to the governor and hand him an envelope of cash under the table.
Can remember one case where I got a 5am ride to the airport. I suspect the guy was driving a friends cab, as his face did not match the registration. He blew through all stop signs we came across. There were no working seatbelts in the cab. I was literally afraid for my life.
Oh and of course his credit card machine was broke, and he had no change, so I have to pay with 20s and get no change back.
In both NYC and Chicago, you can call the cops over this, and they're very responsive (perhaps more so in NYC).
I know what it's like though: I arrived late in to Spain once, I got ripped off as it should have been a fixed fare (I had lived in the city!), but it was late and night and was too tired to argue in Spanish.
I know there are folks legitimately concerned with moral hazard, and genuinely believe letting it all burn down would have been the better approach. I'm just glad they weren't in charge when everything went into a tail spin. I think it would have been a LOT worse for everyone.
The Automaker bailout, in hindsight, seems like it was the better call than letting them fail. If they had failed, the surviving ones would have acquired all the valuable scrap on a fire-sale, expanded to fill the void and you'd probably have more or less the same auto industry today. But in the interim, a lot of people would have lost their jobs. So that's a LOT worse for some, and I honestly can't tell who wins but on aggregate I assume it's a wash.
1 - https://www.federalreservehistory.org/essays/great_depressio...
It is interesting how angry people get about the bank bailouts though, as if it was narrowly targeted at the owners of the banks and not targeted at preserving the entire economy.
Instead of a trillion dollar bailout that went to rich coffers (and most of which was paid back) we could have just thrown the money, mixed, into VC to replace the dead banks (as investment stake, that the government could have sold back later and recouped the costs all the same) and unemployment protection to keep the people temporarily put out of work during the restructuring from destitution.
In that scenario, the robber baron crooks that should have been in prison don't get to waft off on golden parachutes paid with tax money.
Uber/Lyft business model: Unleash a flood of random drivers on an unsuspecting populous.
Not that I agree with the taxi medallion system as it's ultimately been used to grant political favors and prop up unnatural monopolies but it is interesting how the negative consequences supporting the argument for why the taxi industry should be regulated are actually the competitive advantages of the ride hailing companies. . . well, that and unfettered access to VC subsidized fares, but who's counting?
I'm fine with regulations to enforce safety. I'm not fine with the "control supply" aspect. Medallions shouldn't be rationed any more than driver's licenses in general; just require people to pass standard tests and documentation requirements to get a medallion. It's unfortunate that medallion systems seem to fuse a justification that clearly serves the public interest with one that serves the public to a much lesser degree, or even not at all.
Although the conveniences granted by rideshare apps are a big deal, I think this is a huge component. At this point, in a busy(er) city, ridesharing is still very competitive, and prices are subsidized-low.
Living in Austin, right before the city vote to require fingerprinting drivers, which Uber was heavily lobbying against, I could get an uberpool basically anywhere within the city for between $1 and $3.
I'm just hoping that once companies start to raise prices more VCs come swooping in, kind of like still happens with growing websites. As a consumer, the cost of switching is very low.
Not sure if it's a "flood", but the volume of drivers is self-adjusting for the demand. As to the quality of drivers, I have no reason to believe Uber/Lyft drivers are worse than taxis. Chicago taxis drive like lunatics, but this hasn't been so much my experience with Uber/Lyft drivers, who seem to be a cross-section of Chicago drivers. And I don't know that the populace has been meaningfully "unsuspecting".
So all in all, this seems like a net positive--one less thing for the government to spend money regulating in the long run and a better system for everyone else (probably the former caused the latter, but anyway...).
Given the regulations, Medallions would make you 50k profit a year.
You could suspect a bubble, but the math holds up. Though that profit calculation is dependent on the fare regulations and limits on medallions.
Don't fool yourself in thinking that the stranger you're sitting in Uber with, could potentially be your co-worker. He's your former cab driver.
Most of all, is the accountability I care for. The accountability that he didn't had to care about as a taxi driver but that cares very much when he drives an Uber.
We are large we contain multitudes.
The judge says: "Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old..."
If you're willing to admit that it's the same market, the taxes and fees from the city should be lifted. It's absolutely unfair otherwise.
Because if they don't have things like booking, pre-paying via apps etc then of course they are losing business - but in that case why don't they?
I don't use Uber over taxis simply because I can get the exact same service from a taxi, but the drivers are better off in terms of pay and schedule (as far as I know).
I don't use Uber over taxis simply because I can get the exact same service from a taxi
Just off the top of my head:
* 3-4 clicks and I have an Uber on its way vs. Having to talk to a dispatcher. Time saved.
* I know ahead of time how much the fair will be vs. at the end of the ride.
* I simply get out of the car once I reach my destination. I don't have to deal with paying, calculating tip, etc...
* Uber cars tend to be newer and in much better condition.
Now, I am not advocating for Uber, but lets not kid ourselves that the two experiences are even comparable from the customer's point of view.
Obviously taxi companies that still operate like it's 1990 are going to go extinct - my question was why are they operating like it's 1990?
Uber/Lyft is eating their lunch. Now they need to innovate or die. Very likely they die at this point.
But they don't have a monopoly and haven't for several years. I mean changing from phone dispatch to apps has to be done in 6-12 months not 6-12 years otherwise yes they will go under.
So what you are saying is that they are too slow to change? What's the reason for that? Is it that the taxi operators are small businesses and they are a too diverse group to be willing to take large risks/investmentst together such as for improving their common dispatch? In that case - the system is almost a perfect storm.
So would you agree that at challenges to traditional taxi in medallion-cities include:
- Small taxi companies (single car to maybe 100 cars) rather than large operators (1000 cars or more) that would have the money to evolve when needed
- Expensive medallions causing overhead compared to Uber/Lyft
- Long history of monopoly causing an unfamiliarity with rapid changes
- (Possibly) regulative hurdles to overcome before you could e.g. pre-charge for a ride or dispatch with an app rather than phone?
I think you underestimate the amount of work involved in building a rideshare platform. How are taxi companies going to consolidate and find app developers to build a platform to compete with Lyft and Uber in a tiny fraction of the time, not to mention getting the word out about their platform, when Uber and Lyft are already so good (and cheap). This is to say nothing about disparities in investment and regulation.
The apps obviously look almost the same and it wouldn't surprise me if they came from the same developer in many cases. Here are four of the largest for comparison:
https://itunes.apple.com/se/app/sverigetaxi/id504540989?mt=8
https://itunes.apple.com/se/app/taxi-sthlm/id375988670?l=en&...
https://itunes.apple.com/se/app/taxi-020/id503115316?l=en&mt...
https://itunes.apple.com/se/app/taxi-kurir/id503098740?l=en&...
You can see the last 3 just use a skinned standard taxi dispatch app! I appreciate the effort of creating the platform from scratch, but a taxi company shouldn't have to do that. They just license the app.
These taxi companies each had dispatches with many dozens of operators, so they save a good amount of money on using an app and cutting back on people) No difference from other commerce.
The main difference between Stockholm and Chicago is of course that the "taxi companies" are the large city or nationwide companies battling for market share. A taxi driver or group of drivers can also be a "company" but they just operate under the umbrella of the larger brand - who handles all dispatch, branding etc just like a city wide monopoly usually does.
So while it's understandable that a company unlike a monopoly has more incentive to evolve, I don't see any reason why a city taxi monopoly such as Chicago couldn't just make their product more similar to Ubers (regulations aside). I mean - they must also be able to save a ton by getting rid of phone dispatch staff. And anyone with a medallion obviously has an interest in their services not becoming obsolete.
Taxis are also horrible so I'm not convinced they could compete in any case but it's not a fair playing field.
My bet though is on Lyft/Uber becoming just as horrible once the VC money dries up. It will be interesting to see what legislation will arise between then & now.
If you were a lender and you are aware that the medallion market hasn't bottomed, would you lend $200k-300k? Probably only if the down payment was very significant. The article states that foreclosures on medallions are increasing, so the market hasn't capitulated.
I also face the same problem when going out with my wife and hate hailing taxis on the road. Uber is just so much better, I am even ready to pay more than what they are asking. But every few weeks I think about buying a small car, so I don't have to depend on Uber.
Right! Let's loosen the rules and allow the cabs to be in worse condition than they already are, that will get the customers back! /s
That's my only counter to the idea that medallions are going to ruin some lives soon.
I think the big banks are a special case because letting them fail may be more expensive than bailing them out.
So.. to save this industry let's make it less enticing? I'm not saying Ubers and Lyfts are always nice, new cars; but they usually aren't models from before 2010 either. Call us posh, but if you can get a ride in a nicer car for the same price, that would be a thing to consider when picking a mode of transport?