Uber Makes Its Pain New Yorkers’ Problem | Hacker News Reader

Uber Makes Its Pain New Yorkers’ Problem

nytimes.com

31 pointsdavidf1859 comments

FTA: "In the late 1930s, there were just under 12,000 medallions in circulation; more than 75 years later, in a city larger by one million people and benefiting from far greater prosperity, there are only 13,000."

Population growth alone would require another 600 medallions. But remember: in the 1930s, we were just coming out (or on the upswing) of the Great Recession; so affluence would dictate a much larger number. So why is the number so low?

> Instead, arcane aspects of state and local law and, crucially, the power wielded by wealthy and politically generous fleet owners — who don’t want to see the creation of more medallions lest the value of theirs decline — make that [more medallions] virtually impossible.

There you have it. It is, for the lack of a better word, greed. When you have hedgefunds owning medallions[1], you know it's a bad sign. Essential services for the general populace should not be a vehicle for hedge funds.

An ideal (or, a better) system would be responsive. It would look at how busy cabs are, and accordingly change the number of medallions in circulation. Every year (or every nth year, take your pick), have a Dutch auction[2] of the desired number of medallions. Disallow renting of medallions (only the owner gets to drive the cab), which will kill speculation. Put an app around the whole system, so users can hail cabs from their mobile devices. Pain eased.

[1] http://www.wsj.com/articles/SB100014240527023036530045792143...

[2] https://en.wikipedia.org/wiki/Dutch_auction

How are there so little medallions, yet so many idle taxis? And taxi drivers still making barely over minimum wage (if you subtract the living costs)?

This theory that greedy property owners stifled medallion creation is certainly appealing but it doesn't seem supported by the facts at hand.

Can you elaborate what you mean by subtracting living costs? Are you saying that after all necessary expenses they have slightly more than minimum wage left over?

That seems like a wage that shouldn't be compared to just minimum wage, given that in many places (I don't know about new York) minimum wage is below what you'd consider a living wage that covers necessary expenses.

Presumably the driver take home is calculated after they pay to rent or own a medallion. So if they have low pay that just indicates there are plenty of willing drivers to service the available medallions, it is harder to go from their wages to a conclusion about whether the number of medallions is appropriate.

Even better would be to just get rid of taxi medallions and let anyone who passes basic safety regulations drive people where they want to go for money.

Safety regulations do not require a medallion system. Artificially limiting the number of jobs for this industry is not necessary to impose safety regulations. Its only unique purpose is to restrict competition and grant a few drivers a monopoly at the expense of consumers and all other would-be drivers.

I don't see anyone arguing that the number of software developers needs to be arbitrarily capped to prevent software bugs. That makes about as much sense as taxi monopolies.

>I don't see anyone arguing that the number of software developers needs to be arbitrarily capped to prevent software bugs.

Though, now that you mention it...

>An ideal (or, a better) system would be responsive.

Like a situation of economic freedom where millions of individual actors and entrepreneurs can dynamically change the landscape of city transportation instead of imposing a one size fits all scheme?

Well, that would work in a perfect system. In our current system, however, roads are "free". So, if you make driving a cab free and unlimited on those free roads, you just end up with a tragedy of the commons. Medallions solve that, but so would an appropriate gas tax (hint, many times higher than it is now) or some other kind of per-mile payment for road use.

One reason to prefer the Medallion system is that both of the latter two options end up disproportionately impacting low-income people.

The goal is to limit the number of cabs on the road without creating unreasonable barriers to other economic activity using the roadways. This can be done without Medallions, though. Cities could just require a license for taxis, like they do for many other businesses. If that license cheap enough that anyone can afford it (perhaps with a small business loan) but expensive enough to slightly deter entry, then it solves the commons problem without leading to cronyism.

A gas tax effectively exempts vehicles that don't use gasoline (eg. fuel-cell or battery backed electric vehicles).

A daily "vehicle fee" to have a vehicle within the city might solve your problem.

In London, we call it a 'congestion charge':

https://tfl.gov.uk/modes/driving/congestion-charge

Although, as a matter of policy, ultra-low emission vehicles like electric cars didn't have to pay it.

In addition we live on a (mostly) 2-dimensional plane so we can't scale transportation capacity indefinitely, which means even if the roads were owned privately it's nearly impossible for a market to form that would force them to compete with each other.

Why? You can't build a close competitor to 9th Avenue (making up a street name) because A) there are buildings in the way beside it and B) building above it is prohibitively expensive. If these are one-way streets as is common in urban areas 9th Avenue's closest competitors are 11th and 7th and after that competition falls off quickly. Five competitors doesn't make a healthy market - it makes an oligopoly.

If too many cabs start running because it seems lucrative, it'll very rapidly become less lucrative. There are only so many people who want a ride, and taxis are only profitable if they handle a certain number of those rides per day, so there's already a natural limit on the number of taxis.

Yeah, but that limit doesn't take into account the full costs to the system.

Your argument is like saying that common grazing land is okay because there's a natural limit to how many cows can be on it; the number of cows that can fit, or that can be watched by the available farmers, or any other limit that doesn't take into account how many cows the field can actually handle.

Roads are not free, they are paid for via gas taxes. To support your claim that an appropriate gas tax would be large, do you have numbers suggesting how much road spending costs compared to revenue raised from gas taxes?

Medallions don't come close to solving the issue of people free-riding on roads - most of the cars on NYC roads are neither taxis nor ubers.

> do you have numbers suggesting how much road spending costs compared to revenue raised from gas taxes?

http://www.citylab.com/commute/2015/05/debunking-the-myth-th...

By this logic private cars should be issued medallions too. There are much more private cars on the road, than taxis. And private cars use more resources per drive, because they are taking parking space, unlike taxis.

Private cars don't make money when they drive more.

And how is it relevant? If taxis drive more, they move more people too (who would use a private car otherwise).

As long as we didn't subsidize those individual actors by building public roads, that would be fine.

A great way to avoid subsidizing these actors would be for NY to impose a $0.6439/gallon gas tax to pay for roads. If only someone already thought of that and passed it into law...

Does that cover the cost of the underlying property and negotiating with individual landowners?

If you want to claim the price of driving is wrong, by all means crunch some numbers and show us. But acting as if there is a clear subsidy is incorrect.

That there is a huge subsidy is fact: http://usa.streetsblog.org/2013/01/23/drivers-cover-just-51-....

And that analysis understates the subsidy. In fact it would be far more expensive for private organizations to build those roads due to the need to negotiate with individual landowners. I.e. drivers don't pay for the benefit of the government exercising eminent domain to build roads.

Fair point - gas taxes should be approximately doubled and dividend/cap gains taxes should be reduced commensurately to keep things rev neutral. (Choosing the latter two since they are highly distorting taxes.)

Of course, singling out Uber and taxis for special regulation is a nonsensical solution to this issue; the main beneficiaries are people driving their own car.

Making them toll roads (or charging congestion fees at peak hours) would fix individual incentives and help with general traffic issues. Existing gas taxes are a halfway-decent proxy, but that's becoming less true as more adopt electrics and hybrids.

Of course, it's important that fees apply to all vehicles. When London implemented a congestion charge, taxis were exempt. It wasn't long before people noticed that minicab registration cost much less than a year of congestion charges. The loophole has been fixed, but it's still an amusing example of incentives.

Which actors? The drivers, or their customers traveling from point A to point B?

You didn't pay attention: the totally unregulated market was the source of much violence in the 1930ies. History has clearly demonstrated the need for taxi regulation in New York, and the problem is that at some point the regulatory body stopped caring about the public need (and presumably the public never started trying to get more drivers on the streets)

If the goal is to balance having enough taxis available but not too many on the road at a given time, why not make the adjustments every hour or day?

How would you enforce that?

Cab rides are already tracked, so there would just need to be a way of notifying the drivers of the current fee for taking a fare.

That may all be true, but it's a reason to reform the law, not for some people to get away with breaking the law while others cannot.

"A cabdriver on average will make about $17 or $18 an hour over shifts that can last 12 hours. That is little more than the $15 an hour fast-food workers are scheduled to get"

Minimum wage in NY is currently $8.75 per hour. So, according to the article, taxi drivers are earning more than twice that. And that's after they've paid to rent a $1MM medallion.

For context, EMT workers in NYC earn just a bit over $15 an hour when they start out.

So fast food workers and EMT workers get the same wages? Wow, I hope the EMTs at least get significant raises fairly fast.

They don't now. But they would make basically the same thing if the bill to raise fast food workers' (and no one else's) wages goes through.

People support Uber because they support the logic of the free market, which is that the government should redistribute wealth, but not fix prices, including wages. Yes it's tough being a taxi driver, but the real problem is that it's tough being a person who for whatever reason can't get a high paying job. Fixing high wages for taxi drivers doesn't solve this problem, because it doesn't provide jobs for those who don't get to be taxi drivers.

Society has decided that certain jobs should come with certain minimum standards attached to them, that's true of caterers, hotels, surgeons, airline pilots... and taxi drivers.

A free market sets the standards by aggregating individual decision's

"Society has decided" is not a good substitute for an actual reason for a policy. I'm not arguing against democracy here. I also think you are confusing minimum pay with minimum qualifications. A medallion is not a qualification, it is an arbitrary limit (yes there are other reasons for the limit like congestion, but the article discuses pay)

Not being able to get a "high paying job" is not really the problem.

The problem is that the "market" has so far failed to distribute enough wealth to satisfy everyone's needs and for most of those that you can argue that market has been able to satisfy, they are essentially slaves to that market, with little to no mobility.

There's a difference between "you're not qualified for this job" and "too many other people are doing this job".

Presumably Uber's customers have decided that the New York taxis do not meet their minimum standards -- else they would just take a taxi. And who better to make this decision than the people involved?

The flaw in your argument is that if anything goes wrong they will expect New York's authorities to intervene.

"Society" rarely makes such decisions. Governments do. The narrative that government is controlled by society as a whole for its overall benefit is a fascinating fiction.

'the logic of the free market, which is that the government should redistribute wealth'

I do not think this is correct. The free market is a way by itself to distributes wealth. 'Re'-distributing wealth would mean the government interfering. For example by setting fixed prices so drivers earn more money and Uber making less profit (higher losses ;-) (and/or passengers paying higher prices).

Yes, restrictions on prices indirectly redistribute wealth. But what I was saying was that the government should only redistribute wealth directly, via welfare and taxes (eg income, sales or vat).

> The free market is a way by itself to distributes wealth.

The free market only causes agglutination of money.

Limiting medallions creates market inefficiencies which is no good to anyone except the medallion owners. With $1 million medallions drivers have to pay a significant portion of their gross receipts for renting the artificially expensive taxi.

One taxi driver claims to gross $250-$300 for a 12 hour shift, but he pays $150 of that to lease the taxi (with medallion).

http://www.yellowcabnyctaxi.com/nyc-taxi/shift-life-cab-driv...

Thus, about half of our fares plus tips go to paying for the taxi with medallion, before paying for gas.

The story opens with retelling the reasons the medallion system was created... it's probably not a good idea to completely ignore the historical events:

"There were too many drivers going after too few passengers — fares were slashed, tensions between fleets escalated, violence erupted"

Well, a person born on the day in 1937 when the limit was put in effect would have been retired at age 65 13 years ago (age 78). As the economy improved, e.g., post WW II in 1945, 70 years ago, this limit should have been revisited.

All this limit has served to do is to make taxis in NYC far more expensive than they should be (in Manhattan not many own cars) and taxi drivers making far less money than they should be.

If you meant to say that the limits should be revised, may I suggest using wording that actually carries that meaning? I find it hard to see an argument about revising limits in the statement: "limiting medallions creates market inefficiencies which is no good to anyone"

I'm very skeptical of Uber, but I don't think limiting the number of cars is any type of solution.

It's a fairly traditional one, because "too many taxis clogging up the roads" is a common complaint of residents. The first taxi-regulation law in 17th-century London was passed to limit the number of hackney carriages (along with requiring minimum maintenance standards of the vehicles). Of course preferences vary; people who want to take taxis will tend to prefer there be more, while drivers of private vehicles will tend to prefer there be fewer. Residents typically also prefer fewer, unless their own use of taxis overrides that preference.

If there's one thing gov need to do against Uber/Lyft, that's set a high bar for drivers' capability, not limit their numbers.

In the face of higher requirements, Uber would likely let anyone drive and then cast the appropriate narrative (in other words, their current gameplan)

Since they don't currently respect the law, it doesn't make any difference how you decide to change the law because they're still not going to respect it.

Is it just me, or does the photo in this piece quite obviously show protesting Uber tech/marketing employees, not drivers?

If that's the case, and in fact Uber mainly services the relatively affluent, and not typical Bronx residents, then this is a pretty disgusting and disingenuous piece of marketing/lobbying on Uber's part.

Reply on news.ycombinator.com