The medallion system pretends to regulate the taxi industry, but in actuality it’s a scheme that allowed people to buy into a monopoly. This unusual arrangement has insulated the taxi industry from normal market forces at the expense of pretty much everyone living in or traveling to New York.
Riding in a New York taxi is unpleasant and expensive, but since it was a monopoly it had no incentive to do better and there were never any real consequences for failing to provide decent service – even as it became increasingly aggressive in soliciting outrageous tips and jamming advertising down its customers throats.
But it’s not a monopoly anymore and that’s a good thing for New York. I won’t shed a tear for the taxi industry.
Totally agree with you wrt to the taxi industry, but it's the individual stories that are heartbreaking :(
"While the auction has drawn attention to the precipitous fall of the once-mighty taxi industry, it does not reflect the hardship — and heartbreak — of individual owners like Mr. Isac. It is their stories that often get lost in the larger debate over new technology and commutes, and tell of the human cost of the city’s rapidly evolving transportation landscape."
> it does not reflect the hardship ...of individual owners
they bought into a system that really shouldn't have existed. Investments that fail are tragic, but losses of this nature can't really be protected from those who make it (otherwise, there'd be moral hazzard).
it's pretty amazing how ignorant people are, and all in the name of intellectual superiority.
you probably have a good job due to all kinds of luck (though im sure you don't think there was any luck) and then quickly judge these people for making a stupid decision. Meanwhile these people have very limited options and buying a medallion was the closest thing they could do as an investment into their future. is it a racket? maybe, but so is the stock market and corporate jobs. just because they are still working out, does not mean they will forever. Much like medallions it's all a myth that will work as long as it's not disrupted by something else. So these people put so much money on the line to buy into this system and work 2-3 shifts/day driving your drunk ass from club to club and all you can do is look back and call them stupid for buying into something that was impossible to predict that would be disrupted so quickly. it's so easy to turn around after a disruption and call anyone in the disrupted industry a fool for buying into "a system that shouldn't have existed"
Crying for those poor people who bought into a racket? They lost a bunch of money dealing with criminals. Not sure how it's heartbreaking. Ppl using even slightly dirty combustion engines are committing a crime against everyone else. So they're double criminals. Still heart broken? Iv got a license to kill anyone, emitted by our committee for world order. It's a safe investment. Want in?
Agreed. In Turkey, taxi medallions are part of a terrible system. They are extremely expensive in big cities. In many cases, Taxi drivers do not own them. Different drivers work in two or three shifts and pays a predetermined amount to medallion owner (a hefty sum). Sometimes medallions are rented by a third party and he manages the taxi drivers and pays to the top dude.
Government does not allow Uber like systems. Also Taxis are very expensive especially in smaller cities. And no, many does not behave nicely. They are also reckless in traffic.
So we stuck to this monopoly and nobody questions. Why is driving a Taxi a profession in this age of technology? Anybody with decent driving skills can do this yet Taxi drivers are the first to prevent any competition. This pattern is quite noticeable in many other areas of industry. They make restrictions and regulations with good intentions, later it turns to a monster.
Uber is banned in Denmark as well, but this is because there are absolutely no security requirements for Uber drivers, no mandatory first aid traning, nothing.
Proponents of Uber call it a "ridesharing system", but it really is a taxi system, and must abide by the same rules, namely driver training, verified fare metering and other security and fairness measures.
Uber has refused to respect the rules, so they have been banned from operating here, until they can abide by the rules, which are in place mostly for passenger safety and to prevent fraud.
"Why is driving a Taxi a profession in this age of technology? Anybody with decent driving skills can do this"
This can only come from a person who does not know what it actually takes to be a taxi driver (not just a person who happens to drive a taxi, but an actual bona fide taxi driver). There is a certain level of customer service, competency and training involved. You can't just blindly navigate by GPS, you have to know the city, know the traffic, know the shortcuts that a GPS can only guess at.
That used to be the case, but Waze has turned the table on knowing shortcuts/the city/traffic. So we're left with the service aspect, which has basically disappeared from society in the last 20-30 years - I can't find any evidence of it in retail anymore for example.
I do not disagree that it is much more enjoyable to drive around with a taxi driver who knows the city, proud of his work and has a "how may I help you attitude"; I paid 50 quid for a short ride in London 20 years ago and found that quite enjoyable - but if it wan't for the monopoly (which uber has managed to subvert, often illegally), you wouldn't have to wait until 2015 to get "just the transportation and nothing else" - which is what most people actually need.
Uber does ok in London despite it having decent public transport. Even with decent public transport you don't necessarily want a night bus after your date.
Furthermore, Uber does not train its drivers to be taxi drivers or even inform them what training and insurances are required in their line of work.
They advertise this as a way to get a job but when the drivers are fined for driving unlicensed they absolve themselves by claiming it is the responsibility of the driver.
They should not keep complete confidence in this strategy, as they have been sued by their (ex-)drivers for this and settled out of court. (Which may very well be a more lucrative strategy than doing the actual driving, I don't know about that.)
People in US are doing just fine without special "taxi" training. You think Uber drivers does not know short cuts? Rating system is a far better motivator for drivers.
In Turkey and likely in other countries there are regulations for commercial drivers such as they need special health certificates etc but everybody knows it is turns to be just another paper you can buy. If Uber does not follow the regulations you mention, people has a right to choose anyway. The only regulation necessary is to make it deliberate in the cars. A sign telling "This driver does not have first aid training".
No, it has nothing to do with first aid training or security, that is simply a misrepresentation of the situation. In London, Uber operates under a regulatory framework that requires these things, and it works very well and has for years. In Denmark, while they did abolish the medallion system (specifically, polical control over the supply of permits), politicians refused to create a similar framework, so the system remains one heavily favouring incumbent taxis.
Crucially, exactly none of requirements in the delta between the new Danish rules and eg. the London minicab rules has anything to do with protecting customers.
"Traditional" taxi does not have to be bad. I think (I may be mistaken?) London taxi drivers are quite polite and also have to memorise the geography of London, which I imagine keeps a lot of would be but lower quality drivers out.
Indeed, but those that spent 2-3 years gaining the knowledge[0] and then paying for their cab, and licence are then being usurped by a Uber driver with a GPS and a cheap car.
Even with the 'star' system the service levels will drop.
[0]https://tfl.gov.uk/info-for/taxis-and-private-hire/licensing...
To be fair, the reason the medallion system exists in New York is because road space in Manhattan is limited, and the taxis cause a disproportionate amount of traffic. Traffic conditions have gotten notably worse post-rideshare, although there are a bunch of confounding factors as well that could also explain that.
sure there is ... any centrally allocated system of real or artificially scarce resources based on market dynamics works this way. For instance, radio frequencies, water rights, domain names and ticket scalping. In some municipalities liquor licenses, mobile network providers, broadband, and now marijuana licenses work this way too.
I wouldn't be surprised if banks, cosmetologists and realtors were like this too, but I don't know enough about them.
You're right in principle, and I thought about writing the same. But trademarks are IP too, and I have a hard time seeing how this applies to them. I also think copyright is far worse than patents for a few reasons. Firstly, patents do expire, whereas copyright never seem to. Secondly, patents disputes are mostly between businesses, which mean the forces are roughly equal on either side. Copyright disputes are sometimes between businesses, but more often than not, they are between businesses that hold the copyright on one side, and consumers on the other. And in those cases, the balance of power is tilted massively in favor of the right’s holders. Which I am guessing goes a long way to explain why the copyright period keeps getting extended.
many countries grant pharmacists the monopoly of selling drugs and limit the number of pharmacies per area. This kind of system is used across many fields.
> Yes. A fixed number of students are accepted, controlled by the AMA.
No. The AMA does not have any control over how many students are accepted to medical school. The AAMC does, and there technically is a cap, but they've been intentionally increasing it steadily for over a decade in order to increase the supply of doctors.
However, even that's irrelevant, because the number of people graduating medical school isn't a bottleneck for the supply of physicians - residency programs are. There are far more doctors than there are residency slots, and the AAMC doesn't control residency positions. So whatever cap they have at this point doesn't affect anything other than the number of people who graduate medical school and end up having to get a job in a different field.
Do you have any idea what limits residency positions? They don't pay like a doctor but they do doctor like stuff. I would think that hospitals would want a lot of them. Sort of like how in science post-docs are hired everywhere because they are just the same as a research scientist, but you can pay them less.
> Do you have any idea what limits residency positions? They don't pay like a doctor but they do doctor like stuff. I would think that hospitals would want a lot of them. Sort of like how in science post-docs are hired everywhere because they are just the same as a research scientist, but you can pay them less.
It's the other way around. Resdiency positions are extraordinary expensive to offer - remember that this is where doctors actually receive their clinical training. Medicare funds them, because otherwise hospitals would have no incentive to offer them (they would lose money on each resident).
I feel very badly for the people in the article who lost their life savings on a failed investment.
I also feel very badly for people who went broke on Beanie Babies and tulip bulbs, for almost precisely the same reasons.
Edit: I'm serious. Medallion prices peaked in 2014, well after the start of Uber and Lyft's explosion onto the spotlight. It seems like a bad idea for someone in 2006 to have invested a life's fortune in an arbitrarily limited commodity, but fiscal insanity to do the same in 2014. Those things were only ever valuable because the government issued so few of them, not because of inherent worth. When the demand for them fell below even their meager supply, they became (relatively) worthless - as predictable.
I wish the people in the article had sold their medallions to corporations in 2014 when they were still worth a mint. Failing to do so was a tragic miscalculation.
I think this comment is bringing it to the point. Investment wise it was a bad idea to begin with, and when competitors start to hit and easily conquer the same market, then of course it becomes really stupid to invest in that market.
In that regard my pity is also limited. Yes I feel their pain with them. But we also have a responsibility to investigate before making such a huge bet. And sadly if you discuss with people who lost their life savings like that, many actually think they are not responsible BECAUSE they didn't think about. The "logic" being, if you don't think about it, you can't be responsible for the result.
> I feel very badly for the people in the article who lost their life savings on a failed investment.
San Diego did a good thing with this. They bought back the medallion at some price relative to what was paid minus some amount for time owned, interest, etc. Then when they redistributed those bought back medallions, they slightly increased the medallion count.
That sequence stopped a lot of the problems. Anybody who got caught out by medallions collapsing could just get out. Anybody who bought in at this point knew what they were getting into.
Given the limited resources of government and the large number of people who need help, it seems strange to ration that aid on the basis of previously making a bad financial investment.
The medallions exist in a government-created market. If the government offers a buy-in to a regulated business, then ceases to regulate the business in the same way, it's harming its own partners in the regulated industry. Offering to buy back the rights that it sold, well that's simply a way to reduce this harm to its partners.
If you look at like purely a financial instrument, yes. Maybe not if you look at it like a social contract between the city administration and its populace. The aim - keep the taxi situation OK.
When that medallion system started to fail, I don't think it's unreasonable for the city technocrats and or politicians to take a step back and say to themselves - OK, this is clearly not working like it used to. How can we scale back without disrupting and hurting too much those, who were partners in this (now failing) implementation of taxi regulation?
Could it be comparable to going to college for a major in one field that was projected to stay lucrative but went downhill right before you were going to graduate?
I recommend to college freshmen that they select courses that are relevant to their chosen field, but also relevant to other fields. Concentrate on fundamental knowledge, not detail knowledge.
For example, don't take a class that teaches how to use AutoCAD. Take a class that teaches analytical techniques.
> I wish the people in the article had sold their medallions to corporations in 2014 when they were still worth a mint. Failing to do so was a tragic miscalculation.
Some of the people mentioned in the articles were running corporations. They wouldn't by 2+ medallions for themselves.
Good riddance. I was in New York recently, and hailed a taxi for the ride to EWR instead of Uber/Lyft because my phone's battery was flat. The same ride that cost me <$50 on the way in on Uber was over $100 the way back, including effectively mandatory 20% tip -- and this was the lowest of the "suggested" options of 20%, 25% or 30%! And yellow cabs are a lot less comfortable as well, you're separated from the driver by a Plexiglass cage with a TV screen bolted on, attempting to blare ads into your face.
I sympathize with cabbies who spent a lot of money on buying a medallion of their own in the early 2000s and drove their own cab. I have less sympathy for the guy who invested $2.6 million in 2013.
The fares between EWR and NYC are insane because New York State and New Jersey don't have reciprocal taxi licenses. That $100 covered the "lost" fare back to NYC as well as the fare to EWR. If you take a taxi from EWR to NYC you'll also pay effectively a return fare since the taxi can't (in theory) pick up a legal return fare.
Most metro-area car services are cross-licensed in both states (so an NYC black car service can pick up in NJ and vice versa).
> including effectively mandatory 20% tip -- and this was the lowest of the "suggested" options of 20%, 25% or 30%
I moved to NYC just before you could pay by card in the cab. At the time, my friends told me to give $1 if the ride was less than $10, and $2 if it was less then $20 and so on. Most of the time, I think I effectively tipped between 10% and 20%. I kept with that habit after they introduced card payement with these insane suggested tips. How is it now? are you really expected to tip that much?
I feel their use of not providing options between 0% and 20% is deliberate to guilt you into selecting 20% because they know you want to tip something.
I have absolutely nothing to back me on this other than gut instinct that the 20% is the base because that's what the IRS assumes for NYC metro area tippable wages. In reality the TLC probably organized a committee of accountants and medallion holders and spent a year discussing what the three options would be.
> Sohan Gill once saw his medallion as such a good investment — ”better than a house”
If something looks like it's an impossibly good investment, it may actually be.
It's a shame that US city governments let this happen by retaining the medallion monopoly system. If cities let the taxi supply adjust to demand, a taxi license would have been worth the same as any other business license.
Even if cities decided that it is in their best interest to limit the number of taxi drivers, there is no good reason why the license should be transferable property that can be bought, sold and rented.
If a taxi driver quits, the city, and not the previous driver should choose who is the best candidate to replace them.
Likewise, we should have seen the rise of middlemen who put up the capital to buy medallions, rehire drivers at suppressed wages, and proceed to collect rent forever, as bad.
This is essentially the same problem that we see reoccurring everywhere in modern society. We put in a system that seemed like a good idea, but after some time being exercised in reality, turns out to have some serious flaws.
Fixing those flaws is so time consuming and expensive that it becomes a bureaucratic impossibility. The result is that the profits pass onto the few, and everyone else suffers for it. (e.g. politician buying in Washington, software patents, prop 13 in California, etc.)
The risk/outcome - that the taxi supply becomes responsive to taxi demand and licenses/medallions become worthless - has existed as long as medallions have. While the risk is hard to forecast and thus price, it's not new. Investors succeed by pricing risk and investors who bought in 2013 significantly mis-priced this risk, so criticism seems reasonable.
Trouble is if you don't regulate taxi numbers under the old system you end up with 30 taxis hanging out in the same prime location fighting over customers and causing congestion. Hailing apps solve that problem.
I can't feel too sympathetic for the owners--they've been riding high on the back of their drivers for years. The drivers, who in fact are their employees, get no benefits of any kind due to a legal fiction that classifies them as independent contractors. If the drivers--who are actually operating the taxis--want to take calls from the street, from dispatch, from Uber, from Lyft, it should be up to them. After all, if a driver wants to simply park his leased taxi and not drive, he's free to do so--he's an independent contractor. The medallion owners got themselves into this mess by becoming vehicle lessors, not taxi operators. Once upon a time driving a cab was a good job with good benefits. Now it's not a job at all, which is why immigrants rush to drive.
> due to a legal fiction that classifies them as independent contractors.
The taxi industry pioneered the independent contractor model. They provide the car, I lease it and do whatever I want with it for the duration of my lease. The company has very little control over what their drivers do - they would offer bonuses on certain fares to try to get drivers to go get their contracted fares in outlying areas...
Renting a car is much cheaper than leasing a taxi, so the only reasonable use for my leased taxi was to try to make some money with it.
I met a few other taxi drivers who thought that ppl like me, who drove for the biggest taxi company in Phoenix, were getting screwed by Big Taxi. One of these drivers was a solo owner-operator. He did everything himself: regulatory compliance (meter certification and whatever else the department of weights and measures cares about), advertising, etc. The other guys drove for smaller companies because they didn't like Big Taxi's corporate culture. I thought the arrangement with Big Taxi was acceptable.
The series of events which forced my retirement from taxi driving were about 2 years ago, and I haven't kept up with the industry news... One of the guys I used to drive with gave it up when the owner-operator he leased from three in the towel. He did two or three trips for 'duper, rapidly realized that was a waste of his friend's new Prius, and got a 7-day-a-week job at a golf course. Another guy just went back to taxi driving after a year and a half "working his ass off" for a funeral home that didn't actually appreciate his efforts. This one said the call volume is significantly down, but call quality is way up. He recently got to take a fellow from Phoenix to Tucson - the guy had to be in federal court by 9am... It was a good fare.
You could easily argue disruption is likely to result in worse rent-seeking.
Premise: The main way you disrupt an industry is by radically increasing financial efficiency.
You increase profit margins by finding innovative ways to decrease spending on e.g. workforce, letting you shift a larger percentage of your revenue to funders, i.e. the owner class. Those profits are used to further innovate in ways that increase profits, decreasing the working population's share of profits and increasingly centralizing wealth.
Let me put my chairman Mao hat on, and say this is why the needs to be perpetual disruption.
More seriously: the world is changing all the time businesses and business models face challenges all the time. This produces churn where the current crop of winners have little political clout, but start to gain it as they settle in.
Of course if they succeed in gaining political clout, they might be able to dig in and prevent change for a long time until something big and rare comes along and undermines the whole system.
Because Silicon Valley, of which Hacker News and its commentariat are a subset, really tries to avoid thinking about the fact that “disruption” usually just means “meet the new boss, same as the old boss”. Posts which bring this to the surface cause cognitive dissonance and so have to be greyed so they can be ignored.
In Guatemala, ex-taxi drivers tell me the daily spend on the car went to 1/3rd the amount when they bought a car versus renting a taxi. So they were paying 3x as much per day, and in a few years would have nothing to show for it. So even with Uber's 25% cut and lower prices, they say they're doing way better.
In the US, I'm not sure you can compare a medallion costing nearly a million dollars with a car loan for a few dozen thousand. The medallions can swing in price (as we see), a car probably will follow a well-known decrease.
Some of the folks renting cars here do that, rent out for a day and night shift. They're making good money doing so, making it so they charge enough so the actual driver can just squeek out a living. Still better than working a taxi they tell me.
Unless companies like Uber and Lyft can continue to raise billions of VC money almost forever, they eventually have to turn themselves into a medallion system eventually.
This or, expect drivers to get paid way below minimum wage to sustain their current pricing model. Which won't happen.
So medallions are here to stay. Uber and Lyft never had a revenue model apart from subsidize-until-competition-dies. The best case scenario is Uber will be the new medallion system, the worst case will be older system will be back.
The transportation and logistics industry is one of the worst industry to be in. Its a capital intensive market with very low profit margins. Minus VC money Uber and Lyft won't go too far.
I'm reminded of the 2005' Man Push Cart movie about a Pakistani immigrant that sells coffee from a rented push cart in New York. His only dream is to save enough to buy his own cart one day.
This only happened because Uber broke the law, actually undermined the rule of law and they got away with it. Think of what would happen if every corporation could pick at will which legislation they ignore.
Think about this, a business is disrupted to the point where they can't make any money at all. Yet, no customer is hurt in the process. In fact the customer is happier because now at least, he has a choice. I would break a monopolist law for that.
Of course a lot of customers are hurt in the process, actually the entire society is: by weakening the rule of law and by rolling back most advances organized labor made in the last 100+ years. You have been bamboozled by calling this the "sharing economy".
All you see is a cheap ride -- sponsored by VC money and you gladly take it.
Edit: thanks for the downvotes. Care to educate me where I am wrong?
"Of course" is not an argument. Please explain how customers are harmed by having more choice in the marketplace.
The medallion racket was certainly not an advancement for organized labor. Quite the opposite, really - it prevented common drivers from being able to make a decent living and instead transferred more money into the pockets of the established players. Rather than paying off cars and building businesses, drivers end up spending a great deal of money renting medallions (or going into debt when presented a chance to buy one, as the guy in the article did).
Even if you buy the idea that this was to "protect" drivers, would you accept that same logic in your own industry? What if you built a new CRM (sorry, I don't know what you build, if anything) that was better than any other CRM... but you aren't allowed to sell it because the government quota for CRMs is already full... but if you enter you name in an annual lottery, you might get a very small chance to buy a CRM Medallion someday at a reasonable price... or you could buy an existing medallion from another company for $233k and bring you CRM to market now. Does that sound reasonable to you?
Progress is made by breaking laws. The founders of your country committed treason against England. Strikes used to be illegal. Fredom of assembly, speech, religion and press used to be severely restricted.
Those were organized moves by various people not by a company for profit. They have proven to be advantageous to society. I utterly fail to see what advantages are made here.
> Edit: thanks for the downvotes. Care to educate me where I am wrong?
I have upvoted you, because I fully agree with you. Breaking laws is, in my opinion, acceptable in some situations... for example, to protest against injustice (as it was the case with strikes, right to free speech/assembly, and racial segregation) or standing up against neo-Nazis and police brutality. But it is not acceptable at all to break any law for business profit. If you want to make more money and a law hinders you doing so, then go through the democratic channels.
Of course, this does not account for politics being effectively gridlocked, but hey, given you're a multi-billion-dollar corporation, it's definitely easy to hire some top notch lawyers and lobbyists.
And since people get a better service out of that, on average (yes, I know everyone can bring up a terrifying anecdote), it looks like we're better off making a few changes. You seem to paint it black & white, but really if some laws are still being broken, they can be enforced. Or changed. Or reconsidered from the beginning for the new situation.
The change proved that medallions were either a bad idea, or a badly managed idea. Some change would occur anyway.
It only worked for Uber because they provided a valuable service that consumers loved and because the law was corrupt in the first place.
I do not care that rich people who spent millions on a medallion, only to rent it out to actual workers, are losing money.
The self made man taxi driver, is a rare exception, not the rule. The people who own these medallions are rich taxi companies, that then force workers to pay them rent. Good riddance.
Riding in a New York taxi is unpleasant and expensive, but since it was a monopoly it had no incentive to do better and there were never any real consequences for failing to provide decent service – even as it became increasingly aggressive in soliciting outrageous tips and jamming advertising down its customers throats.
But it’s not a monopoly anymore and that’s a good thing for New York. I won’t shed a tear for the taxi industry.