Taxi Medallions: New York's taxi system makes fares higher and drivers poorer

http://www.slate.com/articles/business/moneybox/2012/06/taxi_medallions_how_new_york_s_terrible_taxi_system_makes_fares_higher_and_drivers_poorer_.html

by gruseom • 14 years ago

143 108 14 years ago

slate.com

tokenadult• 14 years ago

Previous submission (no comments):

http://news.ycombinator.com/item?id=4074668

I'm wondering why the duplicate detector isn't catching more of the recent series of duplicate submissions, and why searching for keywords on HN search isn't turning up more of the stories. (I usually use HN search before I post.) I found the previous submission of this story just now with a Google search site-restricted to news.ycombinator.com, after drawing a blank with HN search.

gruseom4• 14 years ago

A little redundancy is a good thing. It compensates for the randomness with which many posts fall through the cracks. This article is an example. It's interesting and surprising (surprised me, at least) and deserves a discussion. Had it got one the first time around I wouldn't have reposted it.

It has fallen through the cracks again though (edit: or so it seemed). Perhaps somebody else will figure out how to repost it in a few days :)

olog-hai• 14 years ago

The previous submission also never showed up in my RSS reader.

graywh• 14 years ago

different URL

uxp• 14 years ago

Yep. This article links to the paginated story, the previous one links to the single page article.

juan_juarez• 14 years ago

New Mexico does the same thing with liquor licences. The worst part is that the state's biggest liquor distributor now owns the vast majority of the licenses. "You have to buy all your shit from me AND give me a percentage of your profits" - sounds like the mafia but it's every day business in NM.

refurb• 14 years ago

That's actually a by-product of prohibition. When they reversed prohibition, a regulation was put into place that the manufacturer, distributor and seller of alcoholic beverages all had to be separate (not owned by the same company or individual).

The gov't decided to step in and do all three after prohibition and it's been a VERY slow move back into the private model since then.

juxta• 14 years ago

I find this line pretty interest: "Because Murstein's company owns a bank, it’s able to take advantage of the Fed’s low interest rates to borrow money for 0.35 percent and loan it out to striving young cabbies who want to own a medallion. The cabbie borrows at around 5.5 percent, with 25 percent down.

“If a borrower doesn’t pay, we send out somebody,” Murstein said. “Literally, they can pop the medallion off the hood of the car and bring it back to our office and, bingo, the guy is out of work.” "

He basically has no risk on his end. Looks like he found a pot of gold!

MichaelGG• 14 years ago

If it's really so risk-free, then others would provide competition with lower rates, less down, payment-free period, etc.

smsm425• 14 years ago

For that, they have first to get a supply of medallions. And current owners won't sell them unless they are given some serious money to replace that 5.5%-0.35% income stream. One of the reasons why the price of medallions skyrockets.

Of course, I imagine it's not completely risk-free. It is a strictly regulated business. Which means you need a lot of friends in key places - otherwise somebody who does have a lot of friends would put you out of the lucrative business and take it for himself.

And there's some measure of competition - 5.5% is not a super-high for a loan with a collateral. Higher than mortgage rates but substantially lower than unsecured loan rates. About 1% over common HELOC rates and about the same as home equity loan rates. Of course, repossessing a home is much harder than repossessing a medallion, so probably medallion business is better, but the rate is not totally outrageous compared to similar loans.

protomyth• 14 years ago

Is there somewhere where a government created scarcity of licenses actually works? The only things I can think of is resource specific activities (e.g. hunting licenses).

crazygringo3• 14 years ago

Well it makes sense to limit the number of NYC cabs -- except for the hour of handoff (~5pm) and in particular neighborhoods at night (Theater District, Greenwich Village, etc.), the number of cabs seems pretty good.

If anyone could drive a cab, the profession might only barely pay a living wage, as each driver would get less passengers, and you'd get a race to the bottom -- and the streets would be more congested too.

To me, the biggest question with taxis is scheduling and demand -- how to get extra cabs to the places/times people need to take cabs from, and the fact that this isn't really compatible with people who want to drive a cab on a predictable block schedule.

gruseom4• 14 years ago

"If anyone could drive a cab, the profession might only barely pay a living wage"

According to the article, it hardly does that now:

shortly after the most recent fare raise in 2006 [...] an independent consulting company found that drivers’ take-home pay for a 12-hour shift averaged $158. (Last year the NYTWA calculated it at $96.) By all accounts, it’s slipped since.

So, something around $10 per hour.

I don't think that drivers' quality of life is motivating this policy.

jrockway2• 14 years ago

I agree. I've never successfully gotten a cab to take me to LGA, for example. (Someone is getting them, though, because I've never not gotten a cab from LGA.)

The distribution throughout the city is also strangely uneven. I used to live a 6th/27th and even at 3 am on a Tuesday, 6th Ave. was densely packed with cabs. But over in Brooklyn Heights where I live now, I think I've seen a cab once or twice. The one time I took a cab in Brooklyn, I had to explain to the driver how to get to a major through street. (The explanation was: "I never leave Manhattan.")

Overall, it doesn't work very well, and 99.99% of the time I take the train. Much cheaper anyway.

rg• 14 years ago

"If anyone could drive a cab, the profession might only barely pay a living wage, ..."

That isn't the case in London, widely thought to have the best taxi service in the world. There, anyone can pass a demanding standard examination and having done so can drive a cab. Anyone can build a vehicle that meets a standard inspection, and once passed that vehicle can be used as a cab. No limit on the number of drivers, no limit on the number of taxis, both inspected but not limited. The result is that different drivers work different convenient hours, some full time and some part time, with larger numbers of cabs available at rush hours and other times of heavy demand. All the drivers know how to drive well, all the taxis are clean and in perfect shape, and there's always one available when you need it. This is what makes it truly possible to live better in central London without a car than with one.

All the schemes to forbid more competitors simply hand profits to taxi operators and produce poor service for taxi users. As usual, government regulations are captured by the regulated industry to exclude competitors.

te_chris• 14 years ago

I'm pretty sure in auckland anyone can drive a cab. Seems to work.

nih• 14 years ago

There's an NPR money episode on NYC cabs @ http://www.npr.org/blogs/money/2011/10/20/141546717/the-mill...

arjunnarayan• 14 years ago

What I don't understand is if the government is going to go to the trouble of creating a giant class of rent-seeking assets, why does it then sell them out permanently? If, for some reason, the government wanted to limit the market to just X cabs, it should auction out X medallions annually, and thereby accrue the producer surplus as rent, instead of the rent accruing to the medallion owners.

Obviously, I believe that there shouldn't be a limit without an obviously proven tragedy-of-the-commons scenario (which in this case is unclear if it even exists). But if it does, it's better for the government to accrue the rent.

Ugh. I can't wait for the Google cars to gut this entire industry to pieces.

WiseWeasel2• 14 years ago

Then what's to stop entities from outbidding everyone, buying up all the medallions every year and leasing them out?

What needs to happen is for passenger interests to be given weight. One way to do that might be to have the cities offer some short-term licenses for single shifts on a spot market, and some long-term (maybe quarterly or yearly) licenses with a fee inversely related to the driver's score over the last period (determined by average rating by his fares, and/or relative average tip amount for the route).

Applicants for long-term licenses with good ratings and relatively high tips for their routes for the previous period would get cheap licenses, those with poor scores would get more expensive licenses, and those without a track record or filed for the benefit of non-drivers would get exorbitant fees.

This would have the secondary benefit for municipalities of drivers being incentivized to declare their tips.

andyakb2• 14 years ago

The market will stop somebody from doing that. There will be a price that if the bids go above, the bidder will not profit because the required shift leasing rate would not allow the driver to make a profit. If the driver cannot make ANY profit, they will realize quickly and not lease any shifts. The market obviously isnt that perfect, but still, it should protect people from bidding way too high to control the market.

If I completely misinterpreted your main point and instead you are saying that it wouldnt change the way things are currently run in practice, then you are probably right; HOWEVER [and I think this is what the parent comment was getting at], the local governments would be far, far better off, at least allowing for some good to come out of this system

jacobolus2• 14 years ago

It strikes me that only allowing individual drivers to buy the medallions might help with this problem. I.e. only allow a person who had bought the thing directly from the government to use it for driving a cab. Then the drivers could take out loans from someone to purchase a medallion, but that loan would be on the same terms as anyone else.

fab13n2• 14 years ago

> what's to stop entities from outbidding everyone?

They can, but by doing so, they'll pay a lot and enrich the state rather than parasites. On one hand, auctions cost them money; OTOH, they can't charge more for the lease than what a taxi driver can earn. Those are conditions where free market regulation works: if they provide little service, they can only make little profit.

> [some] would get more cheap licenses, and [some] would get exorbitant fees.

As soon as you create a bureaucratic regulation body enforcing byzantine rules, you've created a weak point in terms of corruption resistance. Such an incomprehensible administration is exactly what lobbyists can successfully tune to fit their patrons' interests.

More to the point, the only reason why you might want to regulate the number of taxis is to make sure that every driver can earn decent wages without behaving recklessly. With this respect, the medallion system has been broken, seemingly beyond repair, by parasitic investors. Your proposal doesn't sound like a focused answer to the original problem "how to ensure that taxi drivers earn decent wages without having to behave recklessly?"

hristov• 14 years ago

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.

glenra5• 14 years ago

One alleged evil of "excessive competition" here is that with open competition you might get a "race to the bottom" wherein cabs that aren't well maintained or that overcharge customers make the most money. The initial apparent advantage of the medallion system is that it gives the regulators quite a lot of control over what cab operators do and it's easy to imagine that power might be used to do good. Standardizing cab appearance and fares so customers aren't confused, standardizing cab behavior in various ways, that sort of thing.

The downside of this system is that - like nearly every other regulatory system - it is subject to "regulatory capture". Over the years, the established players in any regulated industry have a huge incentive to convince the regulators to rule in ways that keep out competitors. Eventually market competition no longer serves as a check on bad behavior at all - all that matters is keeping the regulators happy. And the regulators are in the pocket of industry, so customers get screwed.

scotty79• 14 years ago

Since we got these new computers and internet and all city could just auction medallions in digital form directly to cabbies daily.

citricsquid• 14 years ago

If the medallions are fixed to the hood of the cab what is to prevent the medallion from being stolen? Do the medallions represent permission and can be replaced easily? The option to "buy" them is making me question my assumption, are people in fact buying what they represent?

wtn• 14 years ago

"A Million Bucks Lying on the Ground! Not Exactly"

http://cityroom.blogs.nytimes.com/2011/10/24/a-million-bucks...

larrys2• 14 years ago

The physical object is not what matters. Same thing that prevents someone from stealing a license plate or counterfeiting one or putting a bogus health inspection cert in their restaurant window. Obviously if you were to affix a medallion (or license) to a vehicle at some point that would be discovered and you would be in hot water. Obviously.

You are not buying the medallion. You are buying the right to operate a taxi. The medallion is just an easy way for a) riders and b) enforcement to at least attempt to judge who is legit and who isn't.

And as the financial people noted they can remove the medallion if someone is in default. If all you had was a number painted on the side of a taxi that wouldn't work the same (someone could say "oops" and still pickup fares.)

chris123• 14 years ago

Just asking for disruption.... (P2P taxis, ride-sharing apps, etc.).

delinka• 14 years ago

I think you're right. But you probably shouldn't call your disruptor a "taxi" and you certainly can't just pick up random people off the street without the license to do so.

Uber is in NY and they cost more than a cab, but I haven't heard how they're doing in that market. I think I'd pay the premium to hire an Uber driver over a random smelly cab any day.

viscanti2• 14 years ago

Uber is also in Chicago, offering both a black car and cab service. So there's definitely movement there to bring lower cost options. They're working through regulatory issues in a number of other cities. The taxi business is extremely over regulated. It will be interesting to see how companies like Uber start to disrupt it.

fab13n2• 14 years ago

My understanding is that Uber does 2 things at once:

(1) they create a legal business to compete with the current taxi one, which is corrupt beyond repair;

(2) they secure the high-end segment of that market to themselves.

Point #1 is quite brilliant, but could be expected from many groups of hackers at ease with statistics and software. Point #2 is pure genius, though: they cannot keep the whole market they create to themselves, because as soon as all legal challenges will have been removed and the business model will have been polished, there will be no way to prevent copycats from stealing their lunch. Instead of preparing to fight a lost battle, they firmly anchor themselves in the upper segment of the market, hoping that copycats will fight for the low margin entry level market.

Therefore, Uber's market share is much lower than it could be: they're after the patrons they'll be able to keep for the long term, not after every taxi patrons. I believe that copycats preying on the whole taxi industry's patronship will soon come and storm the market, though, unless lobbyists manage to kill the legal loopholes fast enough.

nchuhoai3• 14 years ago

I think we should seriously rethink regulation within the cab market. Yes, we need to ensure some sort of standards for security reasons, but shouldn't the cab market be prime for the traditional free market theories?

I don't get this whole licensing deal, fixed tariffs and medallion system

cynicalkane2• 14 years ago

One thing that's usually missing in discussions of New York taxi medallions is how congested the city is and how many of the vehicles on the street (especially in Manhattan) at any given time are taxis. Once a certain point is reached, adding taxis will increase the travel times of taxigoers.

There's been economic analyses of this. I don't recall too many details about the optimal number of taxis (it's probably higher than the current number), nor are taxi medallions a particularly effective way of regulating congestion, but surely bald deregulation is not optimal.

mrkurt• 14 years ago

The most irritating thing about the number of taxis on the streets is how many of them aren't allowed to pick up passengers at any given time. It's amazingly annoying to have empty-taxi after empty-taxi fly by without picking you up...

glenra5• 14 years ago

> surely bald deregulation is not optimal.

"optimal" is not one of our options. The relevant question is whether "bald deregulation" is better than what we've got now, and the answer to that is pretty obviously YES.

Sadly, "bald deregulation" is also not one of our options, but at least it's more likely than achieving something anywhere near "optimal".

droithomme• 14 years ago

It seems like the basic design problem is that one driver can only work 8 hrs a day but the medallions are valid 24 hours a day. This means that one driver can never bid himself for their worth unless he intends to hire two others to work in tandem with him. And if he is doing that, why not hire three drivers and just become a passive income generating medallion owner? And so that is what happens.

michaelochurch2• 14 years ago

This is reminiscent of New York's abominably badly-structured rent control system, which costs the vast majority of New Yorkers an immense amount in increased rent, and will probably never go away because there's a powerful asshole lobby that works overtime to keep it in place.

The idea of rent control isn't so bad. If done properly and fairly, it could make New York a lot better, but the insane legacy system is an unmitigated disaster. Since RC rents aren't even allowed to go up with inflation, there are a lot of people paying ~$200 for apartments that would rent for 10-15 times that. Technically, RC can only be passed within families, but the rules are broken all the time, and there's a common (if morbid) practice whereby people seeking rent control stalk obituaries and try to get themselves named as relatives of the deceased, usually in an arrangement involving paying "key money" to non-NYC resident legitimate relatives of this person. It has created a class of parasitic, law-breaking New Yorkers who will never leave, because they're locked in to an arrangement strictly better than ownership (landlord pays maintenance costs and taxes, which are higher than RC rent) and even if they only visit the city for 4 weeks out of the year, holding on to their RC apartment is cheaper than a hotel-- especially because they can sublet their RC apartments at market rent, which is also illegal but happens all the time.

Now, here's the kicker. The system was developed in 1947 to benefit working-class people. In 2012, almost all of the rent-control holders are upper-middle to upper-class people who have no legitimate claim to needing it. Unfortunately, they're well-connected to the city council and therefore, like cockroaches, will never leave. Disgusting.

stfp• 14 years ago

Hate to be that guy but citation needed?

stephengillie• 14 years ago

Can I cite an economics professor whose name I've forgotten?

He discussed how rent controls prevent both raising prices and selling the controlled property, so the owners can't make money from the property in any way.

Thus, many of these buildings stand abandoned and unsafe for decades.

michaelbuckbee• 14 years ago

It's a legitimate request, but quoting stats for something that is illegal and widely occurring yet rarely enforced would seem to be difficult.

From personal interactions with NYC residents, I feel pretty confident that asking any of them about rent controlled apartments would elicit rants against the system for the reasons specified.

gms• 14 years ago

Why do you think rent control is a good idea? How could it possibly be done fairly?

fennecfoxen• 14 years ago

Welllllll... I am NOT pro-rent-control/stabilization/etc, but I will point out that an existing landlord has some monopoly power over his tenant because the cost of a new apartment search and move is high (in terms of finances, effort, time, emotions, new neighborhoods, lost stability, etc). The free market is only efficient if transaction costs are low, among other things.

But then, on the other side of the equation, every place that has rent control also has the risk of foregone future rent increases baked into the price. They'll also have insane leases meant to minimize that risk. If there is an imbalance of power between the tenant and the landlord because of their relative conditions, the government really has very limited power to change that.

epc2• 14 years ago

You’re conflating “Rent Control” and “Rent Stabilization”.

Rent Control applies to apartments built prior to 1947 and only to tenants and their descendants who have lived in the apartment continuously. There are no new rent controlled apartments in NYC. When you hear of $200 three bedroom apartments in Manhattan, it they exist at all they're likely Rent Controlled vs. Stabilized.

Rent stabilization applies to apartments built roughly between 1947 and the mid-1970s. Rents can only be increased by a percentage determined each year by the NYC Rent Guidelines Board (http://www.housingnyc.com/html/resources/dhcr/dhcr1.html).

Tenants can be evicted from either style of apartment if the landlord can demonstrate that the unit is not the tenant's primary residence, amongst other reasons. While it is almost unheard of for a rent controlled tenant to be evicted, stabilized tenants get evicted all of the time. It is by no means easy.

Stabilized apartments can be removed from the rent stabilization program if the rent exceeds a certain amount, or if the tenant's household income exceeds a certain amount.

Typically landlords would love to eliminate RC/RS entirely, while tenant groups would like to see Rent Stabilization expand. The current vacancy rate in NYC is less than 3.something percent (http://cityroom.blogs.nytimes.com/2012/03/26/decades-old-hou...) so stabilization is unlikely to end any time soon.

[I own in NYC, I don't rent. Calling the million plus people who live in rent stabilized apartments "cockroaches" is itself pretty disgusting.]

dandelany2• 14 years ago

This. I agree that the original rent control program was badly structured, but today, true rent-controlled apartments only account for 1.8% of all rental units in NYC (http://furmancenter.org/files/publications/HVS_Rent_Stabiliz...). And as the parent says, this number can only fall.

Rent-stabilization, on the other hand, is being expanded (the 2011 Rent Act increased the minimum rent for deregulation to $2500/month). It's less drastic than rent control and seems to at least have some effect on keeping rents low(er, this is NYC) without being open to such gaming effects as rent control.

However, there are always loopholes. When I moved into my Manhattan apartment, I was told before lease-signing that the rent would be less than the $2000/month ceiling (at the time) for rent control. However, upon lease signing, the rent on the lease was $2050 and there was an attached rider saying I would be paying a lower, "preferential" rent - the originally agreed upon amount - presumably to avoid rent-stabilization. Who knows if that would stand up in court, but as long as management companies can make the tenants believe it's not rent-stabilized, it doesn't really matter...

michaelochurch2• 14 years ago

Actually, I was talking about rent control and, yes, I know the difference between rent control and rent stabilization. I don't have a huge problem with the latter; it's a much better system. If RS were made uniform across the city, I wouldn't consider that such a bad thing.

Only about 2% of apartments are rent controlled, but when the vacancy rate in Manhattan is regularly below 1%, that makes a huge difference.

There's a fallacious argument people make that, if only 2% of people have RC apartments, they're only responsible for a +2% markup on New York rents. That implicitly assumes the demand elasticity for housing is exactly 1. Not so. This is a bad assumption. Consider the oil crisis of 1973, which established that a 5% drop in oil supply can cause prices to go up 5x or worse. The same happens with housing in urban areas: small discrepancies in availability can have huge effects on price.

Rent stabilization is a lot better and fairer because normal people actually have a chance of getting it, and because it's a more reasonable system. It would be even better if whatever schema were applied to New York were applied uniformly, but RS is a much better and fairer system than RC.

I maintain the position that RC does an extreme amount of damage. If the demand-elasticity for New York housing were 1, it wouldn't, but it's much higher.

Also, I have no problem calling rich people who exploit a system that was designed to help working-class people, at the expense of everyone else who has to pay these insanely high rents, "cockroaches", especially given that they usually break the law in doing so. My problem isn't with legitimate RC beneficiaries who couldn't afford to live in New York otherwise, and who probably comprise a small fraction of 2012 RC-holders, but with well-connected marketing directors making $200,000 per year and alimony socialites who pay $350/month for prime apartments while the rest of the city gets shafted.

(For the record, New York landlords, as a class, would probably lose if RC were abolished, because it's quite likely that the free-market demand elasticity of housing is much greater than 1. Individual landlords who had RC tenants would gain, but landlords with no RC tenants would be getting less rental income, and the overall effect on landlords as a class would be reduced income because the artificially high rents paid by non-RC tenants would plummet.)

smsm425• 14 years ago

Just as an example, one of the rent controlled apartments was occupied by one Kofi Annan. Yes, that Kofi Annan. Some working class guy, right? http://www.nysun.com/national/mystery-surfaces-over-apartmen... Once Kofi Annan became "the Kofi Annan", he passed the apartment to his brother, Kobina Annan, a working-class ambassador of Ghana to Morocco.

Another example is Charles Rangel, a working-class congressman that had not one but four rent-stabilized apartments: http://www.nytimes.com/2008/07/11/nyregion/11rangel.html

If that doesn't convince you of the wisdom of the New York regulations, check out this one: http://www.nytimes.com/2011/02/06/realestate/06cov.html?page...

lhnn• 14 years ago

It seems most people here accept that NYC should, or has the right to, limit the activities of consenting private parties. Why should the government keep a couple from paying me a fwe bucks to shuffle them down the road?

Oh ya, NYC and select parties don't get millions of dollars in fees.

Every time I think about NYC, I think of Tammany Hall, and wonder how little has changed.

ajays2• 14 years ago

I have always wondered about this. In San Francisco (aka "The City"), a driver typically pays $200+ for a 12-hour shift on weekends. Then they go around in a mad dash, trying to pick up as many lucrative passengers as possible; sometimes resulting in deaths[1]

There are 2 rent-seekers in this system. One is the City, which uses these taxis as a revenue stream. Why? We are all paying taxes anyways; why should we pay the City for the privilege to ride a car? And then there's the medallion owners. In the old days, the politically connected got these medallions for peanuts, and are just sitting on them, collecting rent (corruption, anyone?). And surrounding this system is a parasitic bureaucracy for "managing" everything: medallion rentals, credit card transactions, etc. (and we, the taxpayers, pay for this bureaucracy again).

A better solution, IMHO, is the following. Auction off 20% of the medallions every year, using a Dutch Auction. The participants in the auction must be licensed drivers with N years of experience, and must pass a test about familiarity with the City. A driver can get only 1 medallion. The City, as a favor to drivers, can bring banks to the table, who can finance drivers. Each medallion is for 5 years; after that period, the medallion goes up for auction again.

[1] There was a case recently where the driver was headed to the airport with passengers. He was speeding so he could get back there as quickly as possible (there's a weird rule that if a cab leaves the airport but comes back within 30(?) minutes, it can come back to the front of the line). He had a mechanical malfunction, and the cab caught fire. He survived, but his 2 passengers burnt to death. http://abclocal.go.com/kgo/story?section=news/local/san_fran...

larrys2• 14 years ago

"why should we pay the City for the privilege to ride a car?"

To the government it's an indirect form of taxation that is more desirable than "raising taxes" which will prevent you from getting elected. Plus much of it (like hotel taxes) is paid by tourists or people who will not view it as a tax in the traditional sense.

voisine• 14 years ago

I see so many "why don't they just do X, it would make more sense" arguments about all kinds of government programs. The reason that don't in every case is because from the government's perspective the program is working great! The existing medallion owners very much like being able to charge monopoly prices. The city politicians very much like that the medallion owners lobby them to keep the system in place and support their campaigns. Why would they want to mess with something that works just fine? You are not the government. It doesn't serve your interests. It serves it's own interests.

BadCRC2• 14 years ago

The case you cited does not match what you claim.

The round time from SFO to Mark Hopkins San Francisco hotel (where the couple was travelling) is at least 40 minutes and the cab driver was driving from SFO, not to it.

ajays2• 14 years ago

It's been 2 years, but here's the gist of it: cab drivers at the airport are allowed to jump back to the head of the queue if they are gone for a short period. Is it 30 minutes, or 40? Not sure. But I was told this personally by a cab driver, and also read it in the papers when this incident happened. Once the cab driver leaves the airport, he has N minutes (where in is a short number like 30) to come back. So cab drivers drive fast to get to their destination and then head back quickly. In this particular incident, it came out that the cab driver was aware of the mechanical problem but didn't stop to examine it because he didn't want to waste time.

alister2• 14 years ago

> All that began to change in 1979. That year, New York’s Taxi and Limousine Commission changed its rules to allow medallions to be leased out for 12-hour shifts.

The implication here is that the transferability of the medallions caused this big mess. We need a discussion of why medallions--which he says started simply as licenses--are being limited. This is the obvious question that is not addressed. After all, normal drivers' licenses and normal cars are not limited by the government in US.

untog• 14 years ago

We need a discussion of why medallions--which he says started simply as licenses--are being limited.

Manhattan's streets already heave with traffic. Allowing unlimited cabs would make that worse, and there's no free market trigger that would solve the problem.

alister2• 14 years ago

Perhaps it's not worth mentioning, but it's not the first time I've seen a reporter made this same kind of math "error" because it helped make his case:

> taxi drivers have asked for a 20 percent hike in fares. How much would the MTBT like to increase lease rates? Why, it thinks 20 percent is only fair.

The author leaves the false impression that the poor drivers won't make any more money at all -- that all the extra revenue will be grabbed by the medallion owners. But if previously the driver made $100 a day and paid $50 for the lease, then after the fare increase he'll make $120 a day (assuming demand doesn't fall) and pay $60 for the lease. So his profit goes from $50 to $60.

pbreit• 14 years ago

This article provides almost no support for the headline.

robomartin2• 14 years ago

I'm sorry, but this is yet another example of what happens when governments stick their paws into the economy. They interrupt the natural forces of a free market and everyone suffers for it. Nothing good ever comes out of their actions. What's worst, the laws they pass never have a sensible termination date or a built-in mechanism for sensible adaptation to changes.

The more fundamental question here is: Why does the government have the right to regulate and interfere with taxi services in this fashion? Imagine if you had to own a "medallion" to do whatever it is you do. And, imagine that the government tightly controlled these. Imagine that you have to lease medallions just to be able to work.

If you are in any tech related field your reaction is probably one of disgust. Virtually none of the innovation we have had over the last several decades would exist today. It would be nearly impossible for truly competitive forces to develop. Nothing would be the same.

Well, that's exactly what your government and, to be fair, the way some of you are voting, is doing to our country.

Do us all a favor: Stop voting as a tribe and start voting as individuals with brains. If we don't devolve out of our current path and evolve into a strong free-market, low taxes, low government, pro-business, low entitlement society you will live to see this country destroy itself from the inside out. Then what?

Use your brains.

underwater• 14 years ago

"Why does the government have the right to regulate and interfere with taxi services in this fashion." Because taxis couldn't exist without the roadways which is paid for by public funds. A completely unregulated system would mean we end up with a bunch of gypsy cabs could rob riders, overcharge, refuse fares and clog the roads.

Government involvement doesn't necessarily make something a bad idea. In this case the implementation obviously leaves a lot to be desired.

dotnetchris2• 14 years ago

No. Government meddling in a free economy is doomed to failure.

The only protections a free economy needs with the government is protection from cartels/monopolies and from market manipulators. Also said manipulators are likely foreign nations or atleast entities. Like when the US Steel industry was destroyed for us rebuilding Japan with better steel mills than our own country's and not introducing tariffs to make Japanese steel higher cost than American.

glenra5• 14 years ago

Overcharging and refusing fares is what we get now in the regulated system. In practice, "gypsy cabs" often serve neighborhoods where the regulated cabs don't bother to go.

Regarding "rob riders", direct robbery is still illegal - you don't need industry-based regulation to accomplish that end. But if by "rob" you really mean "cheat", the market has evolved multiple mechanisms to make fares transparent. One of these is the "zone card", where the price of the trip depends on how many zones away your destination is from your source. Where jitney traffic is legal, the zone map and price list could even be printed in a sticker on the door so you can see the expected fare before you get in.

Regarding "clog the roads", a functioning jitney system makes it much less necessary for people to own personal cars. (and as a non-car-owning manhattanite, I'd love for the roads to be "clogged" with cabs if that meant I could reliably find one to go to Brooklyn or Queens). (And again, major roads like 42nd street "clogged" with cabs is something the current system produces in spades.)

robomartin2• 14 years ago

The part you are ignoring is that the customers, the public, are not sheep. Bad services can't survive. People would not make use of them.

All you need are reasonable laws. Cabs ought to be in good shape. Serviced regularly. That sort of thing. Other than that, yes, let the market evolve without interference. Do you really think that Manhattan would end-up clogged with bad cabs from curb to curb? No. Beyond a certain population of cabs it will become unprofitable. At some point some would exit the market and do something else. Others might dive for low pricing. Yet others might choose to offer premium services and convenience and vie for those willing to pay a little more. In the end you'd have competition which is good for everyone involved.

I sometimes find it ironic that liberals think they are helping the middle class and the poor by choosing to allow government to stick its paws into everything. In reality the result is exactly the opposite: The rules and regs keep entrepreneurs without lots of money out of some markets and the entitlement programs sap any drive to grow and succeed from the less fortunate. Eliminate those and you'll promote innovation, disruption and growth in some markets that have become "feudalized" through excessive government involvement and you'll see masses of people pull themselves out of poverty by working hard, going to school and generally competing for a better standing in life.

While I find some republican ideas are overly driven by repulsive (to me) religious beliefs (for example, their approach to homosexuals) I have to say that, today, the only choice we have to pull our country out of the steep (and it is steep) nose-dive it is in is to support their candidates and push for a quick 180 across the board. The reality is that libertarian candidates are not going to gain massive traction for a long, long time. We don't have time to waste. We've already wasted enough of it.

Obama? He wasn't even qualified to run a cookie baking operation when he was elected. Rewind to four years ago and imagine posting his resume on Monster.com to shop for a job. I'd be surprised if anyone would consider hiring him to run a cookie factory.

Yet, we handed him (yes, me too) our country because he spoke well, smiled a lot and was a hip candidate. Change. And, of course, idiot Hollywood actors were in love with him. You know, the guys who make twenty million dollars to make a movie, live in ten million dollar mansions and work a few weeks a year? What the hell is wrong with us?

Here we are. Lots of us regretting what we did. And we have the scars to show for it. The guy was a joke and is a joke. If this country doesn't do a fast 180 and re-align with free enterprise and capitalism we are done.

mtgx• 14 years ago

It also makes sure only the very wealthy companies survive there, and that there are no start-ups to threat them.

dotnetchris2• 14 years ago

This inarguably shows the fallacy of "central planning." The government cannot ever out smart a free economy. When the government refuses to allow the free economy: illegal black markets arise and legal fiefdoms are spawned both at the expense of the regular citizen. Who benefits from centralized planning? There's only 2 classes that benefit, the government class and the criminal class.

The simplest solution is just end absurdity like this. Let the free market dictate how many cabs should exist and what fares should exist. Might people become overzealous, overfill supply then strangle themselves from it? Sure. Is it that a bad thing? No. The market will correct, suppliers will leave and supply and demand will resolve the imbalance as it always does.

user49598• 14 years ago

Seems like a lot of people here are complaining about the system without giving much thought to it's actual effects.

There are a metric shit-tonne of cabs in NYC. We don't need more. Maybe we need regulation on how they have to be spread out, but we certainly do not need more. Also, compared to other US cities, cabs here are very reasonably priced. Also, they all take credit cards, have touch screens, and the new ones have outlets to charge your electronics.

It may be a bit corrupt, but it really is a good system for the consumer. And it's all completely standardized across the board. Your cab has to be up to code or it gets taken off the street.

This isn't corruption running wild. The Taxi system in NYC is very functional. None of the problems described in the article are solved by simply abolishing the medallion system. It would take intense regulation, with or without medallions, to make a lot of those things better.

Edit: What we really need to focus on is the MTA. Now theres a system rife with corruption and misspending that actually greatly effects consumers negatively.

gcb• 14 years ago

Really? Is it any surprise that any system that creates artificial offering scarcity instead of quality control of offerings is corrupt to the core?

Taxi Medallions: New York's taxi system makes fares higher and drivers poorer

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