This is just good old fashioned corruption. God knows why these cities initiated the system back in the 30s, but they probably did it at the behest of the cab owners - back then medallions were cheap and cab owners just assumed they would own their own medallion and use it to protect themselves from "excessive competition."

Now there is a group of investors that are very well connected in city politics that own the medallions, so nobody can even think about changing the system. Medallion owners will always set the rules in their favor.

Cab drivers and operators nowadays are usually poor immigrants. They have very little political power. So they suffer long hours and stress. The average citizens that have to suffer high prices usually tend to blame the immigrant drivers.

Even citizens that know about medallions are not likely to use that as a major voting issues. High cab prices are annoying, but there usually are many higher priority issues in a voters mind election time. Especially in a city like New York.

It is good that slate is shedding some light on this issue. At least makes it less likely that other cities will go down this road.