5 ms·

Why is it not so crazy to pay $600K for an item of no value, simply to be allowed to provide a service? It is not a credential, so it can't be compared to the

by greggyb 11y ago

Why is it not so crazy to pay $600K for an item of no value, simply to be allowed to provide a service? It is not a credential, so it can't be compared to the cost of a degree or similar in other fields. It is not and has never been awarded based on merit. The first were given to those who happened to be taxi drivers/owners at a time when taxi service providers when the same convinced the municipal government to limit their competition.

paulmd 11y ago
It costs money because it's a durable capital expense that generates revenue, and can later be sold for as much or more than you initially paid. Now as to why have medallions - taxis cause congestion, and a lot of it. You drive your privately owned car to work and park it, a taxi keeps circling the block all day and pulls to the curb to pick up fares. A single taxi causes as much congestion as 40 private cars [1] - and New York is notorious for gridlock already. You gotta limit congestion somehow, and it makes sense to limit the most congestion-causing vehicles first. And when you're talking about a limited revenue-generating asset then the price spirals upwards. I personally think medallions should be auctioned on a yearly basis or something, to minimize the financialization. [1] http://blogs.reuters.com/great-debate/2012/01/20/more-taxis-mean-more-traffic/ http://blogs.reuters.com/great-debate/2012/01/20/more-taxis-...
- greggyb 11y ago
  It is not a capital expense in the same way that a vehicle is. It is physically impossible to offer taxi service without a vehicle. It is merely illegal to offer certain types of taxi services in some areas without a medallion. I am asking why a medallion is reasonable in the first place, a question we wouldn't have to address regarding a vehicle. As to congestion, that is a post hoc justification of medallions that were intensely lobbied for by taxi companies as an anti-competitive measure.
  - paulmd 11y ago
    Would you say that pollution allocations (eg SO2 or CO2 credits) are also not a capital asset? I mean sure, you can buy them and sell them or take out an option against their future value. But you could just break the law and pollute without one perfectly fine. I fundamentally disagree with that assertion. Legal compliance is just as valid a consideration as physical necessity. Just because you can dump toxic waste in the river doesn't mean that should be the baseline behavior. Congestion is basically a form of pollution - pollution of our traffic system. The existence of taxi medallions is no more or less valid than the existence of liquor licenses. Societies regulate things that they deem to have negative externalities, film at 11. It doesn't matter that they have roots that you dislike (eg prohibitionism), what matters is the role we assign them in the present time.
- JorgeGT 11y ago
  Even if the need for limiting a service is true, why auctioned? Just give them for free in a lottery, and tie them to the recipient so they can't be sold or exchanged. If the recipient doesn't want it anymore the medallion reverts to the Authority and a new lottery is called to re-assign it. This is done for example with public housing in a lot of places.
  - paulmd 11y ago
    At the end of the day they are a scarce, highly demanded, revenue generating asset and as long as people are renting them, someone will price them appropriately (i.e. whatever the market will bear). It should be the city capturing that revenue instead of Mario's Medallion Rentals [1]. There are externalities to having a bunch of taxis clogging up traffic - $500 million per year in wasted time alone. The city is the one who spends to improve mobility. At the end of the day taxi service is a business. Nobody goes homeless because of the scarcity of medallions for roaming taxicabs. Driving for a dispatch service or doing other work - yes, homeless - no. If you're suggesting that we do it as a subsidized public-works jobs program, I can think of much more deserving projects than driving a taxi. I'd rather have them driving subway trains instead, for starters. [1] Note: the current system does not capture revenue for the city very effectively, but it should.
- jandrese 11y ago
  Doesn't Uber solve the wandering empty cab problem? Uber cars don't need to drive around to find fares.
  - paulmd 11y ago
    I'd say it's some better, but not all better. The problem isn't just the finding fares part, it's the fact that they are on the roads all day. When you drive a private car to work you spend 8 hours parked, and the car is off the roads. Commercial vehicles like Uber drivers will do back-to-back runs for hours. It's better than inching around the block all day though. And to their credit they are all driving using GPS guidance. That probably does help throughput somewhat vs Mark 1 Intuition by routing you away from congested routes, avoiding hesitation and missed turns, etc.
- geon 11y ago
  > can later be sold for as much or more than you initially paid If the price is down by over 40% since pre-Über, that's questionable.
  - paulmd 11y ago
    Past performance does not guarantee future returns and all that. That's good in my book, I'm not a fan of the way they've been financialized. I'd rather see them auctioned off on a yearly basis to avoid institutional investors running the price up. So a big drop in medallion value is just fine with me.
jsjohnst 11y ago
I never said it wasn't crazy for the medallions to cost as much as they do. I just said it's not crazy that the person who was wise/foolish enough to pay that shouldn't be allowed to try to recoup the cost from someone using it.
- greggyb 11y ago
  It seems I brought some of my priors into this discussion. Apologies for the misrepresentation of your position.

by greggyb 11y ago

paulmd 11y ago

It costs money because it's a durable capital expense that generates revenue, and can later be sold for as much or more than you initially paid. Now as to why have medallions - taxis cause congestion, and a lot of it. You drive your privately owned car to work and park it, a taxi keeps circling the block all day and pulls to the curb to pick up fares. A single taxi causes as much congestion as 40 private cars [1] - and New York is notorious for gridlock already. You gotta limit congestion somehow, and it makes sense to limit the most congestion-causing vehicles first. And when you're talking about a limited revenue-generating asset then the price spirals upwards. I personally think medallions should be auctioned on a yearly basis or something, to minimize the financialization. [1] http://blogs.reuters.com/great-debate/2012/01/20/more-taxis-mean-more-traffic/ http://blogs.reuters.com/great-debate/2012/01/20/more-taxis-...

greggyb 11y ago
It is not a capital expense in the same way that a vehicle is. It is physically impossible to offer taxi service without a vehicle. It is merely illegal to offer certain types of taxi services in some areas without a medallion. I am asking why a medallion is reasonable in the first place, a question we wouldn't have to address regarding a vehicle. As to congestion, that is a post hoc justification of medallions that were intensely lobbied for by taxi companies as an anti-competitive measure.
- paulmd 11y ago
  Would you say that pollution allocations (eg SO2 or CO2 credits) are also not a capital asset? I mean sure, you can buy them and sell them or take out an option against their future value. But you could just break the law and pollute without one perfectly fine. I fundamentally disagree with that assertion. Legal compliance is just as valid a consideration as physical necessity. Just because you can dump toxic waste in the river doesn't mean that should be the baseline behavior. Congestion is basically a form of pollution - pollution of our traffic system. The existence of taxi medallions is no more or less valid than the existence of liquor licenses. Societies regulate things that they deem to have negative externalities, film at 11. It doesn't matter that they have roots that you dislike (eg prohibitionism), what matters is the role we assign them in the present time.
JorgeGT 11y ago
Even if the need for limiting a service is true, why auctioned? Just give them for free in a lottery, and tie them to the recipient so they can't be sold or exchanged. If the recipient doesn't want it anymore the medallion reverts to the Authority and a new lottery is called to re-assign it. This is done for example with public housing in a lot of places.
- paulmd 11y ago
  At the end of the day they are a scarce, highly demanded, revenue generating asset and as long as people are renting them, someone will price them appropriately (i.e. whatever the market will bear). It should be the city capturing that revenue instead of Mario's Medallion Rentals [1]. There are externalities to having a bunch of taxis clogging up traffic - $500 million per year in wasted time alone. The city is the one who spends to improve mobility. At the end of the day taxi service is a business. Nobody goes homeless because of the scarcity of medallions for roaming taxicabs. Driving for a dispatch service or doing other work - yes, homeless - no. If you're suggesting that we do it as a subsidized public-works jobs program, I can think of much more deserving projects than driving a taxi. I'd rather have them driving subway trains instead, for starters. [1] Note: the current system does not capture revenue for the city very effectively, but it should.
jandrese 11y ago
Doesn't Uber solve the wandering empty cab problem? Uber cars don't need to drive around to find fares.
- paulmd 11y ago
  I'd say it's some better, but not all better. The problem isn't just the finding fares part, it's the fact that they are on the roads all day. When you drive a private car to work you spend 8 hours parked, and the car is off the roads. Commercial vehicles like Uber drivers will do back-to-back runs for hours. It's better than inching around the block all day though. And to their credit they are all driving using GPS guidance. That probably does help throughput somewhat vs Mark 1 Intuition by routing you away from congested routes, avoiding hesitation and missed turns, etc.
geon 11y ago
> can later be sold for as much or more than you initially paid If the price is down by over 40% since pre-Über, that's questionable.
- paulmd 11y ago
  Past performance does not guarantee future returns and all that. That's good in my book, I'm not a fan of the way they've been financialized. I'd rather see them auctioned off on a yearly basis to avoid institutional investors running the price up. So a big drop in medallion value is just fine with me.

jsjohnst 11y ago

I never said it wasn't crazy for the medallions to cost as much as they do. I just said it's not crazy that the person who was wise/foolish enough to pay that shouldn't be allowed to try to recoup the cost from someone using it.

greggyb 11y ago
It seems I brought some of my priors into this discussion. Apologies for the misrepresentation of your position.