7 ms·

For San Francisco Cab Drivers, Once-Treasured Medallions Now a Burden

53 points by shill 11y ago

Kalium 11y ago
I don't know what to say. These people made a bet that the future would look like the past. They were wrong, and it's costing them significantly. Yet... what are we supposed to do about it?
- kilroy123 11y ago
  Local governments could pay money to buy them back? It does seem unfair to charge such high amounts of money for something now worthless.
  - dmitrygr 11y ago
    By that logic apple needs to give me back my $600 for my iPhone3GS He made a bet that value would stay He was wrong Sucks Sad? sure. But not anyone's fault
    - bitJericho 11y ago
      Why? it still works. It would be more like buying a 2 year contract up front and getting a phone and then 2 days later the phone no longer works.
    - hanklazard 11y ago
      That example doesn't seem parallel to me because it lacks a sudden deregulation of a very tightly controlled market (or in this case, a newly exploited loophole or lack of enforcement of law or whatever you want to call this). I think Uber / Lyft etc should either have to play the medallion game (which obviously wouldn't work) or local govts should just do away with medallions and the cities should buy them back from the people they sold them to ... as it is now, it just seems like selective enforcement of taxi laws on the guys with the yellow cars.
    - mmanfrin 11y ago
      If only a handful of iPhones were sold and those iPhones were the only phones that could make calls in SF, then yes -- I think Apple would need to pay you back $600.
    - mschuster91 11y ago
      Nope. By issuing a medallion, the city grants the right to participate with known rules of competition in a specific market and it also has the obligation to protect the licensee from unfair competition. The cities have failed to comply with their duty and so, in my opinion, owe damages to the holders.
      - lololomg 11y ago
        How exactly did the city fail to comply with their duty? It was always legal to call a (non medalian) car to your location and be driven somewhere. The medalian merely gives you the right to pick up street hails, and that rule is still enforced. The city is doing exactly what it promised.
      - smsm42 11y ago
        It's not a right, it's a privilege. And the competition is in no way unfair, the only thing that makes it "unfair" is that they did not pay to the city for the privilege. There's nothing "fair" in being forced to pay exorbitant sums to the city in order to do business. I could get it if the price was commensurate with the service one gets from the city - after all, roads must be maintained, cops and street cleaners must be paid, street lights must be fixed, etc. - but 250K goes way beyond that and is clearly just made to extract money "because we can" and to limit the access to the market. If the city has an unfair practice of restricting business and charging for the privilege of doing something that should be a basic right available for everyone, and somebody relied on that unfair practice to extract rent, and it stopped working, I don't see how one has a claim for damages anymore than Mafia racketeer can claim for damages when a racket victim refuses to pay protection money, or one victim could claim damages because the other victim does not pay anymore and thus has "unfair advantage".
    - rhino369 11y ago
      SF sold them the medallions with the promise that SF is going to limit the number of cabs and now it isn't doing that. That is different from Apple selling you a piece of electronics with a single year warranty and no promise that it's going to be useful in the future.
      - eru 11y ago
        Was there ever an explicit promise?
- rsl7 11y ago
  If the medallion is the only way you can be a taxi, then enforce it. If Lyft and Uber are legitimate, then lose the medallion and pay this guy back his $250K.
  - deleted 11y ago
    [deleted]
  - randyrand 11y ago
    A medallion is not and never was the only way to be a "taxi." Yes, there is little difference between street hailing and dispatch these days. But the law never guaranteed them immunity from dispatch innovation. No one was scammed. But you can still feel sorry for the guy. If there is one thing to learn - DIVERSIFY YOUR INVESTMENTS!
    - ryanobjc 11y ago
      fair enough, but it's often hard to diversify your time and employment. How do you diversity your investment in your employer?
      - anilgulecha 11y ago
        By renting out the medallion from owners, instead of becoming an owner. So you'd pay more for the medallion per unit time, but have the freedom of moving onto other services when they become more popular.
socalnate1 11y ago
"So many people wanted one that they were hard to get. Drivers used to sit on a waiting list for more than 10 years. When their names finally came up, the city charged them $250,000 to buy one." This is the source of the problem.
matheweis 11y ago
This isn't unique to San Francisco, the entire industry is in a free fall nationwide... It is incredible to watch the effects of a little innovation and (effectively) deregulation. Chicaco: "Once a sure bet, taxi medallions becoming unsellable" https://news.ycombinator.com/item?id=9564478 https://news.ycombinator.com/item?id=9564478 http://www.usatoday.com/story/news/2015/05/17/taxi-medallion-values-decline-uber-rideshare/27314735/ http://www.usatoday.com/story/news/2015/05/17/taxi-medallion... New York: "New York City Taxi Medallion Prices Keep Falling" https://news.ycombinator.com/item?id=8856231 https://news.ycombinator.com/item?id=8856231 http://www.nytimes.com/2015/01/08/upshot/new-york-city-taxi-medallion-prices-keep-falling-now-down-about-25-percent.html http://www.nytimes.com/2015/01/08/upshot/new-york-city-taxi-... Philadelphia: "Philly medallions fetch less than 17% of asking price" https://news.ycombinator.com/item?id=9528301 https://news.ycombinator.com/item?id=9528301 http://observer.com/2015/05/the-taxi-industry-is-in-total-collapse/ http://observer.com/2015/05/the-taxi-industry-is-in-total-co...
- r00fus 11y ago
  Don't forget that the "innovator" is operating illegally in many jurisdictions and is actively trying to buy protection (i.e., lobbying).
  - xtqctz 11y ago
    read: don't forget that innovation has been made illegal due to pressure by certain cartels and outsiders must form political alliances to circumvent them.
  - CamperBob2 11y ago
    Gee. I'm sure that's not how the incumbent system was created in the first place, or anything.
  - Scoundreller 11y ago
    In Toronto, it feels like the entire public is on Uber's side. But that could be good PR as well, since I can only poll my circle of friend-users.
derekp7 11y ago
Here's the thing I don't understand -- if the main attraction (from a customer point of view) is the app (with everything that comes with it), why haven't the cab companies got in on the same game? Either put out their own app to hail rides (and maybe give their cabs a more luxury look to them), or sign up as Uber/Lyft drivers themselves? Or is there something I'm missing?
- Meekro 11y ago
  They have: https://gocurb.com https://gocurb.com They've been doing it for a while -- this app used to be Taxi Magic. It's slower to respond than Uber, and more expensive.
  - stephengillie 11y ago
    I've seen more than a few cabs in Seattle with "Use the APP" on the side. Every cab company has a different app. Uber did start the shift to using apps instead of hailing or calling cabs. Now, the idea is in the "fragmentation stage" with the early adopters, where everyone and their brother has developed a different app. Once some of the underperfomers fade away, there will hopefully be more centralization when late adopter customers start using this market.
  - sguha 11y ago
    Taxi prices are set by the city https://www.sfmta.com/getting-around/taxi/taxi-rates https://www.sfmta.com/getting-around/taxi/taxi-rates while Uber/Lyft can set their own prices. Maybe taxis should be able to lower their prices and surge up with demand to even the playing field.
  - smsm42 11y ago
    For what it worth, I used that a number of times when I was in Portland, and it worked just fine for me. Can't compare the prices, having no basis to compare with, but I don't remember the prices being outrageous. In general, if Uber drags the taxi industry kicking and screaming into 21st century, it's a win-win.
- panorama 11y ago
panorama 11y ago
This is an especially poignant story, and it's hard to not feel bad for this driver. On the other hand, people face investment risk all the time, i.e. when franchising a restaurant. When Chipotle or whoever comes in and devours the fast food market, I wonder if the local struggling burger franchisee asks the city for help? I can't speak on behalf of other cities, but anyone who has lived in SF pre-Uber has no shortage of nightmare stories from taking cabs. For people who had to wait years and pay enormous costs for their medallions, many taxi drivers acted smug, entitled, rude, and sometimes even downright shady. I know you can't say this about _every_ taxi driver, but there's no doubt that the current ecosystem treats the consumer many orders of magnitude better.
- lolwutf 11y ago
  Comparing a human being to a local burger franchisee is a pretty awful analogy.
  - panorama 11y ago
    I was referring to a franchisee as a human being. A franchise is a business.
- Multiplayer 11y ago
  It's not quite the whole story. Medallions used to be almost free, which is why the waitlist was 10 years. They started charging 250k, but you can give them back for 200k. From the MTA site: By capping the sale price of medallions, the MTA insulates medallion holders from market fluctuations, either up or down. When drivers want to resell, the price is what they paid, minus a 5 percent transfer fee. The agency said it is unlikely to cut the price. For those cabbies who paid nearly nothing for their medallions, the new sales system is an even better deal; they receive $200,000 when they surrender it for resale."
  - Scoundreller 11y ago
    > For those cabbies who paid nearly nothing for their medallions... I'd argue they did pay for them, they worked for below-average wages for 10 years in the hopes of a payoff. Long-term drivers tend to see getting a medallion as a retirement plan.
sandworm101 11y ago
Cab driver /= medallion owner. For every poor hardworking cab driver who has taken a mortgage out to buy a medallion, there are a dozen sleazy operators who own piles of them, do not drive, and have leased them out to cabbies at horrific rates.
- x0ra 11y ago
  then rent your medallion and go work for uber...
- driverdan 11y ago
  > there are a dozen sleazy operators who own piles of them, do not drive, and have leased them out to cabbies at horrific rates. How is that sleazy? If cabbies are willing to pay then it sounds like the market is working.
  - sandworm101 11y ago
    By 'sleazy' I mean this: http://www.bloomberg.com/features/2015-taxi-medallion-king/img/feat_taxi36__05.jpg http://www.bloomberg.com/features/2015-taxi-medallion-king/i... Full article: (heavily discussed on HN a couple weeks ago) http://www.bloomberg.com/features/2015-taxi-medallion-king/ http://www.bloomberg.com/features/2015-taxi-medallion-king/ Sleazy business operators are those who take advantage of employees, who do things like allocate risk from the highest earners to the lowest. In taxis, this is commonly done by charging a fixed rate for a limited asset (medallion/cab) used in a highly variable business. Individual drivers then carry the risk rather than the millionaire. Legal, but sleazy.
brc 11y ago
Sad story but every economic change for the better creates winners and losers. You can't regulate away loss without regulating away improvement. He is better off forgetting the medallion and finding work somewhere else to repay the loan. He should be able to make a few dollars renting the medallion in the meantime. As for the government stepping in - live by the fake government market, die by the fake government market. I have no sympathy for people who build businesses behind government firewalls or with government subsidies, and suffer when those rules change. Because plenty of legitimate businesses have engine to the wall when the government arbitrarily creates regulations where previously there were none. I just don't understand why this guy doesn't start getting uber pickups - if that is the problem, just join them.
- rhino369 11y ago
  >Sad story but every economic change for the better creates winners and losers. You can't regulate away loss without regulating away improvement. The government isn't a third party here. Compensating him isn't just handing him money for a bad investment. It's compensating him for the fact that SF scammed him out of a quarter million dollars. The reason why the government should have to compensate here isn't because he lost money and pour him. It's because the government sold him a license and then devalued the license on purpose. You could argue that the city never promised to prevent all sorts of transportation competition. And he took that risk knowing that, for example, people could take limos or whatever. But you at least have to have that debate. You can't just write it off as a bad investment. The government is the cause of his loss. Not the market. >As for the government stepping in - live by the fake government market, die by the fake government market. I have no sympathy for people who build businesses behind government firewalls or with government subsidies, and suffer when those rules change. You act like cabs were regulated for the cab drivers benefit, but that's not how or why they were regulated. They were regulated for the benefit of the city and the rides. The medallion system was the other side of a compromise between the city and the taxis. The city would regulate pricing and dictate key parts of their business model, but in exchange they would be protected from competition. It was a quid pro quo. IF you think the medallions shouldn't have been sold in the first replace, why isn't just returning them for the price paid the best solution?
mehrdada 11y ago
Let me guess. For every person in this situation, there were probably ten in his situation a few years back. I suspect if you were to ask him or folks in a situation similar to him before he got his medallion, they would have complained about overregulation from the city and definitely wouldn't have called for more. Perspective.
rubyn00bie 11y ago
I had a great professor who specialized in (Economics of) Public Utilities who made a very important distinction about types of regulation; of which, he said there are essentially two: economic and "safety and soundness." He said, about them, economic regulation is strictly* bad. Safety and soundness, is always* good. Make sure you know which type a regulation is, e.g. Many financial regulations are for safety and soundness of "the markets"; not economic. In this case, I think it's key point out, the pain felt is due to economic regulation. Which was/is putting up barriers for entering and exiting the market. The government removed competition, it raised prices, and was generally bad (I.e. State santioned monoplies). When innovation, and change, eventually moved around those economic barriers it was bad for those protected by 'em. I hope going forward any regulations are strictly safety and soundness related with taxi service. It'll save a lot of pain on all sides. * If you've taken enough Econ, you'll know strictly and always are going "depend on ..."
- eru 11y ago
  Of course, you can also regulate for more safety than the public needs. (Eg trains in the rich world are safe enough arguably, but we ask for even more safety from our planes.)
JesperRavn 11y ago
I see a lot of comments suggesting that medallion owners should be compensated. But the government is not morally obligated to compensate people whose investments lose money due to changes in regulation. And it would be prohibitively expensive to do so, because it is a one-sided affair. No one who made money investing in medallions when they went up in price was arguing "when we bought medallions, we thought that the number of available medallions would increase with demand, resulting in a stable price. Instead, prices shot up, so we feel we should pay back the government some money because their unexpected policy change benefitted us". The government might sometimes compensate people, but that would depend on many factors such as 1) To what extent the person was unable to avoid the risk, and to what extent they willingly bet on the price of the medallion, and 2) Whether the government did all in its power to keep policies predictable, given the unpredictable nature of technological change.
mkhpalm 11y ago
It's hard to feel bad for people who chose to invest in rigged markets. Their frustration should remain squarly with local representation. Show me the public vote that decided to implement medallions. It's like voting to regulate the number of restaurants in a given city and leaving half that market to mcdonalds. (For safety of course) People would laugh at not leaving that up to supply and demand. The only reason it worked with cabs is because nobody used to care how it worked keeping it open to political grease balling. Suddenly people care and now everybody is scrambling trying to explain their positions on it. And make no doubt about it... Every representative from when it was implemented to today is responsible for allowing it to continue under their watch. Once they know you all are going to hold our representitives personally responsible it will go back to supply and demand faster than anybody can thrown money at it.
- x5n1 11y ago
  Most, if not all, of the people holding the medallions had nothing to do with their institution or even maintenance as a monopoly. They are simply entrepreneurs playing an existing game. A game whose rules have drastically changed.
  - smsm42 11y ago
    That's the risk in the entrepreneurship. And that's exactly why people push for less restrictive regulations - to reduce this risk coming from regulatory change. Of course you never can take the risk of change out of entrepreneurship, but at least you can reduce the risk from regulatory challenges and changes. What seems to be happening instead is simultaneously arguing for more regulation and to insulate people from the effects of change in the regulation - which will only breed more regulation, more people hurt by it and demand for even more regulation to compensate for it. The only way out of this vicious circle of regulation to fix regulation is to minimize the regulation to the minimum necessary to ensure basic equal access to the market, basic contract enforcement, etc. and then let the market participants figure it out. That way at least the regulatory component of the risks is greatly reduced. If you are not forced to pay $250k for the privilege to do business, there's no way this investment would go bust.
danielharan 11y ago
There are 1800 medallions for all of SF ( https://www.sfmta.com/services/taxi-industry/medallions/medallion-holders https://www.sfmta.com/services/taxi-industry/medallions/meda... ) At 250k, buying them back would cost $450 million. The city could tax the new cabbies on a percentage of each fare, while buying back medallions over the next few years.
jackvalentine 11y ago
I feel bad for the guy, but no way I would have made that purchase in 2012. A basic SWOT analysis would have made me hightail out out of the taxi business instead of taking on debt to spend $250k committing myself to it. If he gets his $250k back less the processing fee that feels like justice to me. He shouldn't have to wait for a buyer to come up though - it should just automatically be an option now that not regulating Uber seems to have become policy.
pxue 11y ago
you know what'd be a good PR move? Uber helping private cab drivers such as those in the stories out by buying out the medallions and letting them drive under Uber. Win win.

53 points by shill 11y ago

I don't know what to say. These people made a bet that the future would look like the past. They were wrong, and it's costing them significantly. Yet... what are we supposed to do about it?

kilroy123 11y ago
Local governments could pay money to buy them back? It does seem unfair to charge such high amounts of money for something now worthless.
- dmitrygr 11y ago
  By that logic apple needs to give me back my $600 for my iPhone3GS He made a bet that value would stay He was wrong Sucks Sad? sure. But not anyone's fault
  - bitJericho 11y ago
    Why? it still works. It would be more like buying a 2 year contract up front and getting a phone and then 2 days later the phone no longer works.
  - hanklazard 11y ago
    That example doesn't seem parallel to me because it lacks a sudden deregulation of a very tightly controlled market (or in this case, a newly exploited loophole or lack of enforcement of law or whatever you want to call this). I think Uber / Lyft etc should either have to play the medallion game (which obviously wouldn't work) or local govts should just do away with medallions and the cities should buy them back from the people they sold them to ... as it is now, it just seems like selective enforcement of taxi laws on the guys with the yellow cars.
  - mmanfrin 11y ago
    If only a handful of iPhones were sold and those iPhones were the only phones that could make calls in SF, then yes -- I think Apple would need to pay you back $600.
  - mschuster91 11y ago
    Nope. By issuing a medallion, the city grants the right to participate with known rules of competition in a specific market and it also has the obligation to protect the licensee from unfair competition. The cities have failed to comply with their duty and so, in my opinion, owe damages to the holders.
    - lololomg 11y ago
      How exactly did the city fail to comply with their duty? It was always legal to call a (non medalian) car to your location and be driven somewhere. The medalian merely gives you the right to pick up street hails, and that rule is still enforced. The city is doing exactly what it promised.
    - smsm42 11y ago
      It's not a right, it's a privilege. And the competition is in no way unfair, the only thing that makes it "unfair" is that they did not pay to the city for the privilege. There's nothing "fair" in being forced to pay exorbitant sums to the city in order to do business. I could get it if the price was commensurate with the service one gets from the city - after all, roads must be maintained, cops and street cleaners must be paid, street lights must be fixed, etc. - but 250K goes way beyond that and is clearly just made to extract money "because we can" and to limit the access to the market. If the city has an unfair practice of restricting business and charging for the privilege of doing something that should be a basic right available for everyone, and somebody relied on that unfair practice to extract rent, and it stopped working, I don't see how one has a claim for damages anymore than Mafia racketeer can claim for damages when a racket victim refuses to pay protection money, or one victim could claim damages because the other victim does not pay anymore and thus has "unfair advantage".
  - rhino369 11y ago
    SF sold them the medallions with the promise that SF is going to limit the number of cabs and now it isn't doing that. That is different from Apple selling you a piece of electronics with a single year warranty and no promise that it's going to be useful in the future.
    - eru 11y ago
      Was there ever an explicit promise?
rsl7 11y ago
If the medallion is the only way you can be a taxi, then enforce it. If Lyft and Uber are legitimate, then lose the medallion and pay this guy back his $250K.
- deleted 11y ago
  [deleted]
- randyrand 11y ago
  A medallion is not and never was the only way to be a "taxi." Yes, there is little difference between street hailing and dispatch these days. But the law never guaranteed them immunity from dispatch innovation. No one was scammed. But you can still feel sorry for the guy. If there is one thing to learn - DIVERSIFY YOUR INVESTMENTS!
  - ryanobjc 11y ago
    fair enough, but it's often hard to diversify your time and employment. How do you diversity your investment in your employer?
    - anilgulecha 11y ago
      By renting out the medallion from owners, instead of becoming an owner. So you'd pay more for the medallion per unit time, but have the freedom of moving onto other services when they become more popular.

socalnate1 11y ago

"So many people wanted one that they were hard to get. Drivers used to sit on a waiting list for more than 10 years. When their names finally came up, the city charged them $250,000 to buy one." This is the source of the problem.

matheweis 11y ago

This isn't unique to San Francisco, the entire industry is in a free fall nationwide... It is incredible to watch the effects of a little innovation and (effectively) deregulation. Chicaco: "Once a sure bet, taxi medallions becoming unsellable" https://news.ycombinator.com/item?id=9564478 https://news.ycombinator.com/item?id=9564478 http://www.usatoday.com/story/news/2015/05/17/taxi-medallion-values-decline-uber-rideshare/27314735/ http://www.usatoday.com/story/news/2015/05/17/taxi-medallion... New York: "New York City Taxi Medallion Prices Keep Falling" https://news.ycombinator.com/item?id=8856231 https://news.ycombinator.com/item?id=8856231 http://www.nytimes.com/2015/01/08/upshot/new-york-city-taxi-medallion-prices-keep-falling-now-down-about-25-percent.html http://www.nytimes.com/2015/01/08/upshot/new-york-city-taxi-... Philadelphia: "Philly medallions fetch less than 17% of asking price" https://news.ycombinator.com/item?id=9528301 https://news.ycombinator.com/item?id=9528301 http://observer.com/2015/05/the-taxi-industry-is-in-total-collapse/ http://observer.com/2015/05/the-taxi-industry-is-in-total-co...

r00fus 11y ago
Don't forget that the "innovator" is operating illegally in many jurisdictions and is actively trying to buy protection (i.e., lobbying).
- xtqctz 11y ago
  read: don't forget that innovation has been made illegal due to pressure by certain cartels and outsiders must form political alliances to circumvent them.
- CamperBob2 11y ago
  Gee. I'm sure that's not how the incumbent system was created in the first place, or anything.
- Scoundreller 11y ago
  In Toronto, it feels like the entire public is on Uber's side. But that could be good PR as well, since I can only poll my circle of friend-users.

derekp7 11y ago

Here's the thing I don't understand -- if the main attraction (from a customer point of view) is the app (with everything that comes with it), why haven't the cab companies got in on the same game? Either put out their own app to hail rides (and maybe give their cabs a more luxury look to them), or sign up as Uber/Lyft drivers themselves? Or is there something I'm missing?

Meekro 11y ago
They have: https://gocurb.com https://gocurb.com They've been doing it for a while -- this app used to be Taxi Magic. It's slower to respond than Uber, and more expensive.
- stephengillie 11y ago
  I've seen more than a few cabs in Seattle with "Use the APP" on the side. Every cab company has a different app. Uber did start the shift to using apps instead of hailing or calling cabs. Now, the idea is in the "fragmentation stage" with the early adopters, where everyone and their brother has developed a different app. Once some of the underperfomers fade away, there will hopefully be more centralization when late adopter customers start using this market.
- sguha 11y ago
  Taxi prices are set by the city https://www.sfmta.com/getting-around/taxi/taxi-rates https://www.sfmta.com/getting-around/taxi/taxi-rates while Uber/Lyft can set their own prices. Maybe taxis should be able to lower their prices and surge up with demand to even the playing field.
- smsm42 11y ago
  For what it worth, I used that a number of times when I was in Portland, and it worked just fine for me. Can't compare the prices, having no basis to compare with, but I don't remember the prices being outrageous. In general, if Uber drags the taxi industry kicking and screaming into 21st century, it's a win-win.
panorama 11y ago

panorama 11y ago

This is an especially poignant story, and it's hard to not feel bad for this driver. On the other hand, people face investment risk all the time, i.e. when franchising a restaurant. When Chipotle or whoever comes in and devours the fast food market, I wonder if the local struggling burger franchisee asks the city for help? I can't speak on behalf of other cities, but anyone who has lived in SF pre-Uber has no shortage of nightmare stories from taking cabs. For people who had to wait years and pay enormous costs for their medallions, many taxi drivers acted smug, entitled, rude, and sometimes even downright shady. I know you can't say this about _every_ taxi driver, but there's no doubt that the current ecosystem treats the consumer many orders of magnitude better.

lolwutf 11y ago
Comparing a human being to a local burger franchisee is a pretty awful analogy.
- panorama 11y ago
  I was referring to a franchisee as a human being. A franchise is a business.
Multiplayer 11y ago
It's not quite the whole story. Medallions used to be almost free, which is why the waitlist was 10 years. They started charging 250k, but you can give them back for 200k. From the MTA site: By capping the sale price of medallions, the MTA insulates medallion holders from market fluctuations, either up or down. When drivers want to resell, the price is what they paid, minus a 5 percent transfer fee. The agency said it is unlikely to cut the price. For those cabbies who paid nearly nothing for their medallions, the new sales system is an even better deal; they receive $200,000 when they surrender it for resale."
- Scoundreller 11y ago
  > For those cabbies who paid nearly nothing for their medallions... I'd argue they did pay for them, they worked for below-average wages for 10 years in the hopes of a payoff. Long-term drivers tend to see getting a medallion as a retirement plan.

sandworm101 11y ago

Cab driver /= medallion owner. For every poor hardworking cab driver who has taken a mortgage out to buy a medallion, there are a dozen sleazy operators who own piles of them, do not drive, and have leased them out to cabbies at horrific rates.

x0ra 11y ago
then rent your medallion and go work for uber...
driverdan 11y ago
> there are a dozen sleazy operators who own piles of them, do not drive, and have leased them out to cabbies at horrific rates. How is that sleazy? If cabbies are willing to pay then it sounds like the market is working.
- sandworm101 11y ago
  By 'sleazy' I mean this: http://www.bloomberg.com/features/2015-taxi-medallion-king/img/feat_taxi36__05.jpg http://www.bloomberg.com/features/2015-taxi-medallion-king/i... Full article: (heavily discussed on HN a couple weeks ago) http://www.bloomberg.com/features/2015-taxi-medallion-king/ http://www.bloomberg.com/features/2015-taxi-medallion-king/ Sleazy business operators are those who take advantage of employees, who do things like allocate risk from the highest earners to the lowest. In taxis, this is commonly done by charging a fixed rate for a limited asset (medallion/cab) used in a highly variable business. Individual drivers then carry the risk rather than the millionaire. Legal, but sleazy.

brc 11y ago

Sad story but every economic change for the better creates winners and losers. You can't regulate away loss without regulating away improvement. He is better off forgetting the medallion and finding work somewhere else to repay the loan. He should be able to make a few dollars renting the medallion in the meantime. As for the government stepping in - live by the fake government market, die by the fake government market. I have no sympathy for people who build businesses behind government firewalls or with government subsidies, and suffer when those rules change. Because plenty of legitimate businesses have engine to the wall when the government arbitrarily creates regulations where previously there were none. I just don't understand why this guy doesn't start getting uber pickups - if that is the problem, just join them.

rhino369 11y ago
>Sad story but every economic change for the better creates winners and losers. You can't regulate away loss without regulating away improvement. The government isn't a third party here. Compensating him isn't just handing him money for a bad investment. It's compensating him for the fact that SF scammed him out of a quarter million dollars. The reason why the government should have to compensate here isn't because he lost money and pour him. It's because the government sold him a license and then devalued the license on purpose. You could argue that the city never promised to prevent all sorts of transportation competition. And he took that risk knowing that, for example, people could take limos or whatever. But you at least have to have that debate. You can't just write it off as a bad investment. The government is the cause of his loss. Not the market. >As for the government stepping in - live by the fake government market, die by the fake government market. I have no sympathy for people who build businesses behind government firewalls or with government subsidies, and suffer when those rules change. You act like cabs were regulated for the cab drivers benefit, but that's not how or why they were regulated. They were regulated for the benefit of the city and the rides. The medallion system was the other side of a compromise between the city and the taxis. The city would regulate pricing and dictate key parts of their business model, but in exchange they would be protected from competition. It was a quid pro quo. IF you think the medallions shouldn't have been sold in the first replace, why isn't just returning them for the price paid the best solution?

mehrdada 11y ago

Let me guess. For every person in this situation, there were probably ten in his situation a few years back. I suspect if you were to ask him or folks in a situation similar to him before he got his medallion, they would have complained about overregulation from the city and definitely wouldn't have called for more. Perspective.

rubyn00bie 11y ago

I had a great professor who specialized in (Economics of) Public Utilities who made a very important distinction about types of regulation; of which, he said there are essentially two: economic and "safety and soundness." He said, about them, economic regulation is strictly* bad. Safety and soundness, is always* good. Make sure you know which type a regulation is, e.g. Many financial regulations are for safety and soundness of "the markets"; not economic. In this case, I think it's key point out, the pain felt is due to economic regulation. Which was/is putting up barriers for entering and exiting the market. The government removed competition, it raised prices, and was generally bad (I.e. State santioned monoplies). When innovation, and change, eventually moved around those economic barriers it was bad for those protected by 'em. I hope going forward any regulations are strictly safety and soundness related with taxi service. It'll save a lot of pain on all sides. * If you've taken enough Econ, you'll know strictly and always are going "depend on ..."

eru 11y ago
Of course, you can also regulate for more safety than the public needs. (Eg trains in the rich world are safe enough arguably, but we ask for even more safety from our planes.)

JesperRavn 11y ago

I see a lot of comments suggesting that medallion owners should be compensated. But the government is not morally obligated to compensate people whose investments lose money due to changes in regulation. And it would be prohibitively expensive to do so, because it is a one-sided affair. No one who made money investing in medallions when they went up in price was arguing "when we bought medallions, we thought that the number of available medallions would increase with demand, resulting in a stable price. Instead, prices shot up, so we feel we should pay back the government some money because their unexpected policy change benefitted us". The government might sometimes compensate people, but that would depend on many factors such as 1) To what extent the person was unable to avoid the risk, and to what extent they willingly bet on the price of the medallion, and 2) Whether the government did all in its power to keep policies predictable, given the unpredictable nature of technological change.

mkhpalm 11y ago

It's hard to feel bad for people who chose to invest in rigged markets. Their frustration should remain squarly with local representation. Show me the public vote that decided to implement medallions. It's like voting to regulate the number of restaurants in a given city and leaving half that market to mcdonalds. (For safety of course) People would laugh at not leaving that up to supply and demand. The only reason it worked with cabs is because nobody used to care how it worked keeping it open to political grease balling. Suddenly people care and now everybody is scrambling trying to explain their positions on it. And make no doubt about it... Every representative from when it was implemented to today is responsible for allowing it to continue under their watch. Once they know you all are going to hold our representitives personally responsible it will go back to supply and demand faster than anybody can thrown money at it.

x5n1 11y ago
Most, if not all, of the people holding the medallions had nothing to do with their institution or even maintenance as a monopoly. They are simply entrepreneurs playing an existing game. A game whose rules have drastically changed.
- smsm42 11y ago
  That's the risk in the entrepreneurship. And that's exactly why people push for less restrictive regulations - to reduce this risk coming from regulatory change. Of course you never can take the risk of change out of entrepreneurship, but at least you can reduce the risk from regulatory challenges and changes. What seems to be happening instead is simultaneously arguing for more regulation and to insulate people from the effects of change in the regulation - which will only breed more regulation, more people hurt by it and demand for even more regulation to compensate for it. The only way out of this vicious circle of regulation to fix regulation is to minimize the regulation to the minimum necessary to ensure basic equal access to the market, basic contract enforcement, etc. and then let the market participants figure it out. That way at least the regulatory component of the risks is greatly reduced. If you are not forced to pay $250k for the privilege to do business, there's no way this investment would go bust.

danielharan 11y ago

There are 1800 medallions for all of SF ( https://www.sfmta.com/services/taxi-industry/medallions/medallion-holders https://www.sfmta.com/services/taxi-industry/medallions/meda... ) At 250k, buying them back would cost $450 million. The city could tax the new cabbies on a percentage of each fare, while buying back medallions over the next few years.

jackvalentine 11y ago

I feel bad for the guy, but no way I would have made that purchase in 2012. A basic SWOT analysis would have made me hightail out out of the taxi business instead of taking on debt to spend $250k committing myself to it. If he gets his $250k back less the processing fee that feels like justice to me. He shouldn't have to wait for a buyer to come up though - it should just automatically be an option now that not regulating Uber seems to have become policy.

pxue 11y ago

you know what'd be a good PR move? Uber helping private cab drivers such as those in the stories out by buying out the medallions and letting them drive under Uber. Win win.