Taxi Medallion Prices Plummet Under Pressure From Uber 329
HughPickens.com writes Most major American cities have long used a system to limit the number of operating taxicabs, typically a medallion system: Drivers must own or rent a medallion to operate a taxi, and the city issues a fixed number of them. Now Josh Barro reports at the NYT that in major cities throughout the United States, taxi medallion prices are tumbling as taxis face competition from car-service apps like Uber and Lyft. The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data. "I'm already at peace with the idea that I'm going to go bankrupt," said Larry Ionescu, who owns 98 Chicago taxi medallions. As recently as April, Boston taxi medallions were selling for $700,000. The last sale, in October, was for $561,000. "Right now Uber has a strong presence here in Boston, and that's having a dramatic impact on the taxi industry and the medallion values," says Donna Blythe-Shaw, a spokeswoman for the Boston Taxi Drivers' Association. "We hear that there's a couple of medallion owners that have offered to sell at 425 and nobody's touched them."
The current structure of the American taxi industry began in New York City when "taxi medallions" were introduced in the 1930s. Taxis were extremely popular in the city, and the government realized they needed to make sure drivers weren't psychopaths luring victims into their cars. So, New York City required cabbies to apply for a taxi medallion license. Given the technology available in the 1930s, It was a reasonable solution to the taxi safety problem, and other cities soon followed suit. But their scarcity has made taxi medallions the best investment in America for years. Where they exist, taxi medallions have outperformed even the Standard & Poor's 500-stock index. In Chicago, their value has doubled since 2009. The medallion stakeholders are many and deep pockets run this market. The system in Chicago and elsewhere is dominated by large investors who rely on brokers to sell medallions, specialty banks to finance them and middle men to manage and lease them to drivers who own nothing at all. Together, they're fighting to protect an asset that was worth about $2.4 billion in Chicago last year. "The medallion owners seem to be of the opinion that they are entitled to indefinite appreciation of their asset," says Corey Owens, Uber's head of global public policy.. "The taxi medallion in the U.S. was the best investment you could have made in the last 30 years. Will it go up forever? No. And if they expected that it would, that was their mistake."
The current structure of the American taxi industry began in New York City when "taxi medallions" were introduced in the 1930s. Taxis were extremely popular in the city, and the government realized they needed to make sure drivers weren't psychopaths luring victims into their cars. So, New York City required cabbies to apply for a taxi medallion license. Given the technology available in the 1930s, It was a reasonable solution to the taxi safety problem, and other cities soon followed suit. But their scarcity has made taxi medallions the best investment in America for years. Where they exist, taxi medallions have outperformed even the Standard & Poor's 500-stock index. In Chicago, their value has doubled since 2009. The medallion stakeholders are many and deep pockets run this market. The system in Chicago and elsewhere is dominated by large investors who rely on brokers to sell medallions, specialty banks to finance them and middle men to manage and lease them to drivers who own nothing at all. Together, they're fighting to protect an asset that was worth about $2.4 billion in Chicago last year. "The medallion owners seem to be of the opinion that they are entitled to indefinite appreciation of their asset," says Corey Owens, Uber's head of global public policy.. "The taxi medallion in the U.S. was the best investment you could have made in the last 30 years. Will it go up forever? No. And if they expected that it would, that was their mistake."
The lesson (Score:5, Insightful)
Re:The lesson (Score:5, Funny)
I'm selling mine and buying something safe, like diamonds.
Diamonds and guns (Woo Hoo) (Score:2, Informative)
I'm selling [my taxi medallion] and buying something safe, like diamonds.
Especially because conflict-free cultured diamonds [google.com] have no chance of threatening the De Beers cartel and the "diamonds and guns" [wikipedia.org] that The Transplants sang about [wikipedia.org]. "It's a wicked world that we live in. It's cruel and unforgiving."
</sarcasm>
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I like the implied cultural racism of "conflict" diamonds.
You know... A supposed embargo on trading in diamonds from war-torn places in Africa, which should exclude such diamonds as the means of support for the warring sides and regimes.
Cause they will totally ALWAYS be worthless and will NEVER be valuable again now that it was decided that they are worthless.
Now there is no chance that arms dealers will profit from the blood of the oppressed through those diamonds.
Because it is totally inconceivable that s
Re:The lesson (Score:4, Insightful)
Kidnappers should go to jail. For quite a long time, IMHO. However, if they've completed their sentences (presuming they are completable... actual life sentences, well, there you go) and they are walking around free, they should have the same rights you have.
This retribution-based mania to punish everyone forever does not serve us well at all. I can think of quite a few situations where it will do us real harm. Generally speaking, when you take the prospect of rehabilitation from a person, you have no reason to expect rehabilitation. Ever. Creating a disadvantaged, permanently held-to-the-bottom-rung underclass from those who have had run-ins with the legal system is exactly the wrong thing to do.
Without hope, all it takes is one spark to set that particular fire ablaze. I honestly expect to read about that spark in the news any day now.
Re:The lesson (Score:5, Insightful)
There's risk to investing in anything. Maybe the real lesson is don't bet your entire financial life on one investment vehicle (no pun intended).
Re:The lesson (Score:5, Insightful)
Absolutely correct. The Medallion business was artificial scarcity, protected by insiders.
But on a broader scale the problem is that the world is awash in surplus capacity at every turn. Automation and robotics are compounding that problem at an exponentially increasing rate.
Ultimately we have too much labor and too much capacity to produce -- everywhere. This is a conundrum for economic models which require scarcity. We weren't supposed to have too much food, too much energy or too much labor. Demand was supposed to increase at a constant rate ...but of course we juiced the world with credit and now we've built productive capacity and availability that cannot possibly be met with demand. We are surrounded by business models and prices which are conceptual remnants of earlier eras when capacity was restricted. These models can only ever be preserved through artificial means, because given a natural, free-market dynamic, competition and automation drive prices south.
So it's not just medallions that are priced at unsustainable levels. Its nearly everything that's artificially overpriced. And that includes us.
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> Absolutely correct. The Medallion business was artificial scarcity, protected by insiders.
It wasn't just "insiders". There's been profound corruption at every level of the taxi industry, from hiring illegal immigrant drivers, to refusing or ignoring background checks, to fraud about accidents, to bribery in selling or releasing medallions. There is no "merit" in the medallion sales industry in most cities: the price is ridiolously out of the reach of small businesses, and it enforces a monopoly or cart
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But uber cars are still just taxis. How much did uber pay govt officials to get taxi licenses over the max quota. If uber can do it, can any joe run his taxi service by putting up a web site to book his taxi? Or is uber still pretending it's not an internet-based taxi service, but a ride-sharing service?
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That's the only difference, albeit just a technicality. Old-school taxis can be flagged down by waving your arm or calling their cell phone, whereas Uber taxis are flagged down by sending a "flag taxi" message over the Internet. I don't see much difference between the two, other than the internet flag down can be used to flag down a taxi at a much longer distance than can be done by waving your arm.
Uber is still like a regul
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Economics. Drivers don't go out when they can't make any money. Painful way to limit capacity, but it will happen eventually.
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Scarcity results because humans want unlimited amounts of goods.
No they don't.
The amount of goods a human can posses directly is limited by said human's lifespan and the amount of freedom he/she is willing to sacrifice to such objects.
You can posses many more pairs of pants if you put them all on at the same time - but you will have to sacrifice your freedom to directly posses chairs, cars or even the ability to procreate.
Re:The lesson (Score:5, Interesting)
Don't invest in and artificially scarce commodity.
You mean Bitcoin?
I know I'm going to be modded down, but it had to be said.
If we followed all such laws (Re:The lesson) (Score:3)
If we followed such "laws", you'd still have to use pay-phones instead of the cellular one in your pocket. And your car's speed would've remained limited to 4mph and you'd have to pay someone to walk in front of it with a red flag [wikipedia.org] — or keep using a horse-drawn carriage.
But you are even more thoroughly full of it — because, though Uber may have a few billion, it is not Uber but rather the drivers, who sign up with them, that a
Comment removed (Score:5, Insightful)
Why are medallions sold and not leased? (Score:5, Interesting)
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The summary says they are leased.
Re:Why are medallions sold and not leased? (Score:5, Interesting)
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The question you're responding to asks why they aren't leased from the city.
The summary you cited without reading says they're leased from speculators via middlemen to drivers.
0/2
Re:Why are medallions sold and not leased? (Score:5, Funny)
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Its an old historical system. Liquor licenses work the same way, and in many areas the cities are starting to rent them out instead of selling them. Better for the city who keeps getting income pretty much as a form of tax, better for restaurants who don't need to fork tens or hundreds of thousands (I don't remember how much a license is worth in a big city) up front that they need to get a bank to finance. And if shit happens, they're not stuck with a worthless liquor license. Sure, its not as good an inve
Re:Why are medallions sold and not leased? (Score:5, Insightful)
cities could just stop going after Uber and make them pay a "medallion tax"
Except then Uber drivers wouldn't be part time, "picking people up whenever they happen to be going that way" type service. They would have to work and earn enough for the medallion mortgage/rental. And as they become ful time drivers, the service will become indestinguishable from a taxi service.
Better solution: Do away with medallions as a tradable asset and move to a permit system. Have insurance, maintain your car and not have a criminal record and for a fee sufficient only to cover the program cost, you get your permit.
The medallion system was intended to limit the number of cabs on the road. Before it was put into place, everyone with an old beater could hire out as a taxi service. The roads were jammed and the prices were cutthroat (and some drivers as well). A permit system won't fix this problem directly. But by holding minimum standards up, it can serve to keep some of the low budget/low quality cabs off the road.
Re:Why are medallions sold and not leased? (Score:5, Interesting)
Uber already IS indistinguishable from a taxi service, with the single exception that they don't pick up flags (which makes no difference all but large metro markets). Nearly ALL Uber drivers work 8-12 hour shifts in vehicles they bought (or lease from uber at usury rates, between 1k-2k a month) specifically to drive for Uber.
Uber has succeeded in remaking the cab market and externalizing all equipment costs and liability to the drivers, all while actually even paying them (unbelievably) less than the chicken-scratch cab drivers already make, and all the while pretending they do something different than charge money for a ride somewhere. Many drivers are making 3-4 dollars an hour after vehicle maintenance, depreciation, taxes, water and snacks for passengers, and Uber's 20% and assorted fees.. The new standard on the 'Pay' on the Uber driver forums is drivers making less than the IRS per-mile exemption rate of 40 something cents a mile. And UberX is actually more expensive (at base rate, non-surge) than every single cab company in my town of 250k.
I've driven cab (three years now) and for Uber (recently for a month), and I will never drive for Uber again. Aside from the fact that a single poor rating from a drunk moron that I refuse to let bring a sloshing open tallboy in my car can deactivate me, driving for UberX is working for free (and I wasn't even on the hook for a car payment or lease). Most people aren't figuring this out until after they drive for a few months and quit, but by then Uber has lured in a new crop of suckers with spammed craigslist ads promising '45-90k in your spare time'. I hope Uber does replace taxis and become the only show in town, just so I can watch all the fucking Uber evangelists start bitching about how Uber actually became MUCH WORSE (already happening) than the taxi companies they replaced.
I'm sure I'll get flamed for writing this as a driver, but the simple fact of the matter is that Uber had a chance to make improvements over the current system for drivers and riders, and it colossally blew it by choosing to be absurdly greedy and shady. It temporarily improved service for riders in large medallion based markets, but has shown overall that they don't give a fuck about passengers or drivers, and I guarantee you, I ABSOLUTELY GUARANTEE you, in 2-3 years, it will be far worse than what it replaces.
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I'm sure I'll get flamed for writing this as a driver
I won't flame you, but I would suggest being a taxi driver might motivate you to write a little FUD. Obviously, the existence of Uber is a serious threat to the status quo with taxi drivers. In fact this whole article is about how much owners of these medallions have to lose. Please bare with me a moment while I question something here...
You say...
Uber has succeeded in remaking the cab market and externalizing all equipment costs and liability to the d
Re:Why are medallions sold and not leased? (Score:4, Interesting)
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Except then Uber drivers wouldn't be part time, "picking people up whenever they happen to be going that way" type service.
This idea that most Uber drivers are "part time" and "just headed your way" is garbage. The majority of Uber drivers are full time to the extent that they rely on their Uber income for most of their income.
For example, not the comments from Uber about being kicked out of Nevada:
Beginning tonight, nearly 1,000 jobs disappeared in Nevada and those residents lost their ability to earn a living...
Does that sound like part timers "just headed your way"? No.
Uber (and Lyft) cars are unregulated taxi cabs - albeit nicer cars and much better service - but none the less, taxi cabs.
If cab companies cleaned up their acts by providing
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The roads were jammed and the prices were cutthroat
That's a really negative way to say everyone who wanted to hire a driver could do so easily and inexpensively.
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Why are medallions even sold as an asset, instead of leased from the city government? It just creates a vehicle for private rent-seeking and speculation
Rent-seeking by the government is no better!
Business monopolies can fail over time, and given time for the management to change, usually do (look at MS's works, ye mighty, and despair). But government-granted monopolies have lasted for centuries in the past.
Keep government in the business of regulating product quality and fraud, and out of the business of creating monopolies. A commercial driver's license is a great idea, and it the right answer to the "Uber problem". Artificial scarcity for government p
Make it like license plates (Score:2)
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If there's no artificial scarcity, then no it's not a monopoly, but then what purpose do the medallions serve? You do realize that Uber started with all full-time drivers, right? Real-time dispatch of "livery service" cars: the drivers are permitted just like taxi drivers, but the cars (usually Towncars) aren't technically taxis.
I'm all for a "chauffer's license" (as its called in many states): a specific commercial drivers license required to drive others for money, taxi or no.
You do realize many/most ta
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If there's no artificial scarcity, then no it's not a monopoly, but then what purpose do the medallions serve?
That depends. Have state governments tried to take cars off the road by increasing the price of license plates? If so, when and where has this happened, and what results have been common?
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If there's no artificial scarcity, then no it's not a monopoly, but then what purpose do the medallions serve?
Expirable taxi licenses, granted by the government to anyone who passes a test and pays a fee would be government regulation and a part of the price of doing business.
The cost of the process would be transferred to the customers while the benefit would be reaped by both the customers, small business owners and in part general public through the ensured qualities of the drivers and their abilities which would be determined by the administered test.
Transferable, marketable, artificially scarce permanent licen
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Expirable taxi licenses, granted by the government to anyone who passes a test and pays a fee would be government regulation and a part of the price of doing business.
The cost of the process would be transferred to the customers while the benefit would be reaped by both the customers, small business owners and in part general public through the ensured qualities of the drivers and their abilities which would be determined by the administered test.
And in many places that's exactly how it works! Taxis, Towncars, and limos all have the same sticker. But the sticker on the car has nothing at all to do with the quality of the driver. People keep not getting this in these Uber discussions. Taxis are only very rarely owned by their drivers - the drivers rent them by the day from the taxi company. The assurance of product quality you get from anything attached to the car is limited (especially if it's a medallion you can move form car to car - tat add
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Is it really a government-granted monopoly if anyone with a chauffeur's license and proof of appropriate insurance can lease a medallion from the city government? It'd be like buying license plates: something everyone does every 4 years.
...because the state has a monopoly on granting driver's licenses. BTW, in California we just get a sticker every year. The plate lasts until it is stolen or becomes illegible. You get an emissions test every other year, IIRC, unless you live on one of two counties which only require an emissions test on a transfer to a non-family member or when registration has lapsed. (You can non-op, re-op, and not have to smog... here in Lake county. And one other, I forget which.)
I'm not suggesting that all monopolies
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Perhaps they should just be licensed, with things like customer service, fleet cleanliness, and driver's performance of knowledge of the city routes evaluated to decide who gets them. They could also just give them to whoever wants them and let the market decide which company survives.
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It's exceptionally easy to prevent this kind of aftermarket. Make every leased medallion PERSONAL.
I.e. only the owner of the lease can use it. If he can't, lease expires and is granted to another driver.
All this requires is a desire to control destructive potential of free market capitalism, ensuring fair competition instead.
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All this requires is a desire to control destructive potential of free market capitalism, ensuring fair competition instead.
But that would be communism and everyone would have to start talking in Russian, drink cheap vodka and wear ugly winter hats with earmuffs.
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No, many of us actually know what socialism is because we happen to be living in socialist countries with functioning free market capitalism.
You on the other hand are talking gibberish, which is often popular among certain libertarian circles that like to confuse "socialism" with "government regulation".
Re: Why are medallions sold and not leased? (Score:4, Insightful)
Nice try, but you don't get to call something socialism just because the outcome is something that you don't like. Capitalism is always, 100% of the time, about trying to restrict or eliminate competition if it is in any way possible to do so. If the resource in question is not scarce, a capitalist will try to make it scarce. That's what is going on here.
I concur that this particular sort of thing is not free market behavior. But it is not socialism. This is crony capitalism. It is regulatory capture. The elimination of competition by any means necessary, including government regulation done against the interest of the people the government is supposed to work for is the ultimate goal of a capitalist.
Bubble (Score:4, Insightful)
Also for a long time this system has be renowned for only attracting the sketchiest drivers, so it obviously was not working at all.
Some people never learn. (Score:3)
WTF? Either he doesn't really own 100 medallions (and his bank does), or he considers having "only" 30 M$ the same as being bankrupt.
He reminds of a scene from "The Queen of Versailles" (http://www.imdb.com/title/tt2125666/). Some 50 year old lady was complaining that last year "she owned 10 multi-million-dollar houses", and that now, she hasn't anything left.
Re:Some people never learn. (Score:5, Insightful)
Yup. Its a little like being a landlord (which is probably your example, I didn't see it).
There's statistics depending on the city, where renting out a place is always 10-15% profit over the expenses of owning and maintaining a property. Also, if you go to a bank with a reasonable income and buy a property that already has a tenant, getting financing is reasonably easy.
That basically means that theoretically, over a reasonable period of time, you could buy an infinite amount of small properties, use the money from one to fund the next, quickly make enough to hire a super to maintain the properties for you, and basically have free, infinite income.
But the world doesn't work that way, does it? Anything easy is a race to zero. Yet there's still a 10-15% profit on being a landlord (not even counting the property value going up by the time you sell) Why?
Oh right, the "work" here is the risk taking. You could be getting a tenant that doesn't pay and be stuck trying to evict them (extremely hard in some states) and foreclose on the spot. A street gang could open up shop next door and the police has trouble getting them out and your neighborhood goes to hell. A contractor could get a permit to build a high-rise across the the street. City taxes could go up faster than rent does.
And thus, I know a lot of people who tried to become landlords and ended up in financial trouble. That risk is what you accept to get an easy real estate profit.
This is the same thing. Medallions were easy profit because not everyone thought so, else they'd have been a race to zero too. And thus, the risk manifested itself.
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Even if you could rent, what's wrong with financing a home via mortgage?
Easy availability of mortgages makes housing more expensive.
In saner countries, people build small houses on their own land and expand them as they need more space. They and their neighbours work together to build each others' houses, so they're only paying materials costs, and won't need to borrow vast amounts of money to do it.
In rent-seeking nations, the government requires you to hire anointed ones to build the houses a particular way, and the banks take much of your lifetime income in a mortgage to pay
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> Even if you could rent, what's wrong with financing a home via mortgage.
The devil is in the details, I'm afraid. Please look carefully at what happened with the sub-prime mortgages, where people over-invested in homes with mortgages they could not afford, and in many cases were defrauded by the real estate agents and even misled or defrauded by the banks providing the mortgages. The typical "20% down" for a mortgage serves many purposes, but a very large purpose of it is proving that you can live withi
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Most people need to borrow just to eat and have shelter. What would you have them do?
If that's really the reason they borrow money, we should have a hard look at the lenders. It's simply a bad idea to lend money to people who are most likely not going to pay it back. Which of course is exactly what got us the 2008 mortgage crisis: US banks lending left, right and centre to anyone who asked (especially when it came to buying homes), without checking whether they could reasonably pay anything back.
Even if you could rent, what's wrong with financing a home via mortgage? At least then you are building equity. Your monthly shelter check becomes savings.
That should not normally get you to 100-120% debt/assets levels. Banks will normally not lend mo
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WTF? Either he doesn't really own 100 medallions (and his bank does), or he considers having "only" 30 M$ the same as being bankrupt.
He is not going to go bankrupt, unless he does it on paper. He has other assets if he's amassed those medallions, and they're not exactly worthless now, either. His business might go bankrupt, but only if it's predicated upon leveraging an unfair position in the marketplace, in which case we should all rejoice.
Why no taxi company's app? (Score:5, Insightful)
Now you kids over there, off my lawn!
Re:Why no taxi company's app? (Score:5, Interesting)
One of the big deals about Uber for me is that their app and infrastructure makes the taxi companies look like pathetic dinosaurs. Calling a lift is easy, you can track their position in real time, if something goes wrong or if they're not responsive you can deal with that, you can pay through the app... It's just a much better user experience. Taxi companies probably never even heard of the term, and they're looking extremely stupid for it.
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They're not stupid, they just have different goals.
The taxi companies are owned by the people who have invested in medallions. They want their medallions to increase in value and be able to rent them out for large sums, which means they want there to be a scarcity of taxis and no competition. If their drivers make less money, the owners have to charge less to lease a medallion, they make much less regular income, and the value of the medallion itself decreases as well.
Things like investing in a software arc
Comment removed (Score:5, Interesting)
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And for the commenter below that indicated the "hailacab" app, yeah, I figured there was one, at least one if not more. Why, though, would anyone use Uber or Lyft if you could get a "real" cab? And is it just inertia that the cab companies don't become m
Re:Why no taxi company's app? (Score:4, Informative)
http://hailacabapp.com/ [hailacabapp.com]
Driverless cabs (Score:2)
Uber/Lyft are described as "disrupting" the traditional taxi business model. In 5-10 years when all cabs are driverless, Uber/Lyft will be a footnote.
Shall we shed tears (Score:5, Insightful)
that a fundamentally corrupt system is taking a little pain? They aren't even close to the woodshed yet.
There is no reason for medallions to exist any longer. The very easy solution to this is a) require a different class license for hired (hailed or called) car drivers and b) require the use of special plates (many already require a TX- type plate). I'm not even sure a uniform color is really "required" given the presense of the "taxi (un)occupied" roof top display though at this point I think yellow (at least in NYC) is so ingrained it may be a disadvantage to differentiate a hailed car.
Shockingly, the first two of my requirements already exist in most places. So again, why are we still dealing in the corrupt medallion business?
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Because the system that regulates it is corrupt! At the federal level it is pretty much a given at this point. Go lower to the state level and it is not as bad but it is still not good, ALEC and such, and down to city/county level you likely have less volume/size but you also have less oversight.
Until, starting at the top, we remove the money = speech corruption that started in the 70's we will see "solutions" continue to be be how can we word our new form of corruption in a way that sounds legit.
Divesting (Score:2)
Maybe the deep pockets get out of taxi medallions and start investing in tulips. [wikipedia.org]
Both cause and effect of Uber success (Score:5, Informative)
Demand for rides is highly variable depending on tourist season, holidays, weather and sports. Medallions can not scale to maximum demand while also allowing for affordable prices throughout the year. Everyone knows that trying to catch a taxi in NY is an unreliable nightmare and one should always have a backup transportation plan.
It's too bad really, as regulation is badly needed for companies like Lyft and Uber. Ideally, DMV would require a second, stricter written and road tests for people who are going to drive for money. Then points would be subtracted from driving record for both traffic violations and run ins with the law, including cheating on the fare. We need to try to prevent psycopaths from picking up passengers, but not with an an onerous system based on scarcity.
Re:Both cause and effect of Uber success (Score:4, Funny)
KORBEN
(sighs)
I don't need one.
FINGER (V.O.)
You forgetting who sat next to you for
a thousand missions.
I know how you drive.
KORBEN
Finger! I'm driving a cab now, not a
space fighter!!
FINGER (V.O.)
How many points you got left on your
license?
KORBEN
(lying)
Uh... at least fifty.
FINGER (V.O.)
In your dreams! See you tonight!
$800k? (Score:2)
Re:$800k? Same racket, different mob. (Score:2)
how can they really be worth that? Isn't each medallion worth 1 taxi cab? I'm having a hard time trying to figure out how 1 taxi cab can bring in enough money to justify that kind of value.
Come to think of it, I'm having trouble with the entire world economy adding up. This fascist groove thing has never added up, and it ain't a free market or level field.
People are unfair, in spite of natures gifts. Welcome to the primitive social human infection of reality - living organic systems led by intangible, experiential , desires.
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Over 45 years? Especially if driven by two different family members on different shifts? 16 hours a day times 6 days a week times 52 weeks a year times 45 years is about 225,000 hours. I suspect taxis can make far more than $4 an hour, enough to cover gas, vehicle maintenance/repair/replacement, a financed medallion payment, and a meager living for the family.
This assumes it's a family medallion. The ones sold today for that much are rented to the drivers and operated 24 hours a day 7 days a week.
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Firstly, it's a one off cost - not an annual charge as some illiterates are claiming[1]. Secondly, when one driver is asleep another can use it.
[1] Though of course there's still an ongoing cost associated with it. Nearly a grand a week if interest is at 5%.
555% markup is very profitable (Score:2)
The total cost of driving, including wear and tear on car, is about 54 cents per mile, or $2.70 for a five mile trip. A taxi charges $15. There's a lot of money to be made with a 555% markup.
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Yes, but that five mile trip takes 10 driving minutes, plus entry/exit, plus time to next fare - call it 15 minutes per five mile fare while on duty over a whole shift. $15 - x 4 fares per hour = $60. Pay the cabbie a wage that doesn't require federal assistance (125% of poverty wage, plus medical benefit costs, plus taxes, plus overhead for leave) comes to about $22-25 hour all burdened. So your "throw-away employee" rate for labor leaves you about $25/hr - 42%Profit (71% markup).
Considering that not ever
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most NYC medallions are owned by a few people who lease them out. the largest owner is a russian immigrant who owns around 200 medallions he bought up in the 80's and runs a garage where the serfs pay him to lease cars, he owns a gas station to sell his serfs gasoline, etc.
for the rest they are owned by immigrants who happen to have a lot of cash governments don't know about and it's a nice way to launder that money
Still not worth it (Score:2)
So *before* fuel, maintenance, depreciation, and driver costs, a medallion (before Uber) was worth less than 14% ROI? That sucks.
no intrinsic value to them (Score:2)
/. summary is becoming an article (Score:5, Insightful)
Medallion system should never have existed (Score:3)
How do Uber/Lyft prevent psychopaths? (Score:2)
Genuinely asking: Not having tried either of these services, how did they solve the problem of vetting the drivers so the public is safe?
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Genuinely asking: Not having tried either of these services, how did they solve the problem of vetting the drivers so the public is safe?
Dude, have you been in a cab? Ever? They don't adequately vet drivers, either. Legislation is I hope pending and the story is intensely personal (not for me) so I won't go on but seriously, you are putting way too much faith in cab companies if you think that you're safe getting in a regular cab
Bankrupt? The sky is falling! Really? (Score:2)
"I'm already at peace with the idea that I'm going to go bankrupt," said Larry Ionescu, who owns 98 Chicago taxi medallions.
Then,
'In Chicago, their value has doubled since 2009.'
1) Does not compute
2) diversification, look it up
It was always about limiting competition (Score:4)
For all the flack we goo about forbidding uber... (Score:5, Informative)
* make a "taxischein" (driver license allowing you to transport people)
* Have insurance which allow commercial transportation of people
* Have a metered reader which the government checks ("geeicht")
None of which is an artificial scarcity like the medaillon mentionned.
And yet what do we see in the article here ? Artificial limitation in the country of the "free market" which are even worst than in Germany.
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Maybe his first language isn't English and he wasn't sure which one is correct. In Dutch, the plural of driver (bestuurder) is bestuurders, the plural of egg (ei) is eieren, and the plural of taxi is taxi's. If you go for taxi's the first time and taxis the second, at least one of them is right.
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okee
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In Dutch, the plural of driver (bestuurder) is bestuurders
Best Turder? Why can't we have such awesome words in English?
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You do. "Cut" is the Dutch word for cunt, though it's spelled "kut". Similarly, lull is homophonous with lul, meaning dick.
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"For the luls" takes on a whole new meaning then...
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lol is also a dutch word, meaning 'fun'. "We hebben lol gehad" = "We had fun"
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Hyperbolic much? No cab company charges $30 for a 1-2 mile trip. That's less than $10 (including a tip) in every cab in every city I've been in. I suspect you are an Uber driver or astroturfer since your whole post is fucking ridiculously dramatic.
What is the logical fallacy where you claim all disagreeing viewpoints are sponsored called?
Re:Mod the parent up! (Score:4, Interesting)
Let's see, I took a cab from my house to SF once, a total of about 12 miles and the ride cost me about $90 (plus I had to pay for the bridge fare).
I recently took a cab in the LA area from the Airport to a person's house only a couple miles away, and it was about $50 dollars. I was charged about $7 right off the top just for the fact that the ride started at the airport.
I took another cab in Seattle this past year, from our hotel near the airport to the cruise terminal and the fee was about $80 at least.
The closest I've come to getting charged what you said was in Las Vegas that was only a mile or two and it was $15. After finding out how short of drive it was, my wife and I walked back instead of catching the cab.
Don't know where the heck your riding cabs for $10 (with the tip included), but in my little cab'ing experience, I've never found one. I think they'd charge you that much for driving to the end of the block. Most cabs I've seen charge you a couple bucks before leaving the curb and to start the meter.
Re:Follow the money? (Score:5, Insightful)
The medallion owners, and they show their appreciation to the city government in an appropriate fashion.
Same reason they don't allow some stores (in the US, typically liquor stores or car dealers) to open on Sundays. It's all about protecting the incumbents from a new entrant who wants to increase their market share and doesn't mind that the existing businesses would have to start caring about their customers.
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I'm not really sure why you think Blue Laws [wikipedia.org] are designed to protect incumbents. Why outlaw sales on certain days when it's much easier to keep existing dealers in power [thetruthaboutcars.com] by establishing franchise laws instead?
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Same reason they don't allow some stores (in the US, typically liquor stores or car dealers) to open on Sundays.
While there are still some "blue laws", for the most part in the US, this isn't so. Certainly not in Washington state, where liquor stores or car dealers are open seven days a week...
Re: And In Other News... (Score:2)
I believe it's not per year, but perpetual, and *maybe* it can be leased to more than one driver (one driver won't work 24x7, and to leave such an investment not making money while the driver sleeps is crazy).
But even then, agreed. It's a lot of money to recover!!
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Who said anything about $1m per year. You buy a medallion, you drive the taxi for x years, you sell the medallion (Or you lease / work for someone with a medallion etc).
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Per year makes no sense. At a million dollars a year, a taxi operating 24/7 (with no breaks for fueling or maintenance) would have to make (above other operating expenses) just over $114.15 per hour just to pay for the medallion.
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It's actually taxi union goons who manipulate government to close off the market.
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It's no different than a college education. Yes, $800k is still insane, but if you're told you have to spend $X to enable your career, plenty of people choose to pay it. In that case $100k is pretty reasonable for most people these days. At least with the medallion you don't also have to spend four years; you can start your career right away.
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Didn't anyone ever do the simple math to figure how many rides it would require to break even ?
They did. It was based on financing the medallion. I bet very few holders have 100% equity in them. An $800k loan financed at 4% is available for mortgages. If medallions were being regarded as comparable collateral by lenders, the cost of this loan is about $3800/mo.
I figure few holders have 100% equity, but I also figure few holders are close to zero. Thuys, the $3800 figure is an upper limit on the mont