7 ms·

Why can't we get rid of taxi medallions? (2012)

39 points by adrianmacneil 11y ago

dang 11y ago
Discussed in 2012: https://news.ycombinator.com/item?id=4088941 https://news.ycombinator.com/item?id=4088941.
- adrianmacneil 11y ago
  Interesting. I just stumbled across this and thought it made for amazing reading, considering how much has changed in just 3 years.
  - dang 11y ago
    No kidding. "Uber" appears nowhere in the article.
    - tdylan 11y ago
      This was right around the time Uber realised what their UberX could be, after seeing Lyft's system be left alone.
gambiting 11y ago
What I don't understand is, why are they allowed to sell the medallions at all? The problems with the medallion system stems from the fact that due to supply/demand problem, their prices skyrocketed. But they should quite simply be non-transferable.
- jws 11y ago
  If you made medallions nontransferrable then you would see each medallion be owned by its own individual corporation, then the corporation would be sold instead of the medallion. A fixed term license would be a better idea.
  - jonlucc 11y ago
    If I remember correctly from this[1] Planet Money podcast about a man who owns many medallions, the guy does have separate company names for each medallion. http://www.npr.org/sections/money/2015/07/31/428157211/episode-643-the-taxi-king http://www.npr.org/sections/money/2015/07/31/428157211/episo...
  - Someone 11y ago
    If the government only hands out new ones that cannot be sold to humans that problem cannot occur.
- cpwright 11y ago
  I think they should be transferable, but they should only last for 5 years or some other reasonable fixed term. Make it long enough that there is some stability; but not so long that it becomes something that is like a real estate or mineral rights investment. Let the city auction the fraction of them that come up for renewal each year; so that instead of a private entity making money off a scarce city resource the city would.
- johnward 11y ago
  It seems like they should have either used the medallion or returned it to the government. How do we fix it now though? Does the government get rid of medallions? Does someone refund the people who bought them? It's pretty clear people prefer the uber model but the cabs do have at least on reason to be mad, the medallions they bought to comply with regulations.
  - merpnderp 11y ago
    Why should taxpayers bail them out? They bought into a monopoly and that's like paying the teacher a bribe so you can take other kids' lunch money. This is a perfect example of corporatism, and should not be rewarded with a soft landing when it fails.
    - johnward 11y ago
      We don't have too. We could just say "you must have a medallion to operate a cab". They secondary market drove up the prices so I guess it doesn't make sense to have the gov reimburse them. If there was no secondary market then it might.
- imglorp 11y ago
  In kleptocracies like Philly, there's similar game called "pay to play," where anyone wanting to bid on a city contract has to make some administrator happy in some personalized way. City admins routinely go to jail for this.
pcurve 11y ago
Price is dropping fast. http://nycitycab.com/business/taximedallionlist.aspx http://nycitycab.com/business/taximedallionlist.aspx. Current owners are putting it up for sale for less than $600,000. I guess it's uber effect.
- Gustomaximus 11y ago
  To save you looking it up, prices peaked in 2011 @ $1 million for a medallion. Interestingly corporate medallions are now pushing toward $1 million ($280k in 2004). And if the 13,347 medallions were once valued at $1mil and now $600k that's a $5.3 billion paper loss. Ouch https://en.wikipedia.org/wiki/Taxicabs_of_New_York_City#Medallions https://en.wikipedia.org/wiki/Taxicabs_of_New_York_City#Meda...
  - Retric 11y ago
    Medallions are a productive asset, so 5.3 billion is somewhat disingenuous.
    - deleted 11y ago
      [deleted]
    - mathgeek 11y ago
      Wouldn't the current and future production be factored into the price, though? I'd have to guess that 5.3 billion is a low estimate for actual losses if you owned one of these in 2011 and still hold it.
      - Retric 11y ago
        Your double counting the returns as future cash flows are already factored into the sale price. Suppose you had a bond worth 2$ that paid out 1$ and is now worth 1$. That's not a paper loss of 1$. PS: At the last auction, in 2008, the opening bid was $189,000, and medallions sold for as little as $226,000. http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/ http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/ In total, TLC will be auctioning off 2,000 new medallions, 40 percent of them to drivers. (January 20, 2014) that's a significant part of the price drop.
adrianmacneil 11y ago
> “A taxi medallion system is nearly impossible to end even if it proves to be providing unfairly high gains to a limited number of original medallion owners,” the report concluded. “Medallion owners fiercely resist any possible threat that may challenge their advantage.” It's crazy how defeatist they sound in this article. Little did they know that in just 3 years companies would be struggling to get rid of their medallions, and the taxi lobby would be in ruins.

39 points by adrianmacneil 11y ago

dang 11y ago

Discussed in 2012: https://news.ycombinator.com/item?id=4088941 https://news.ycombinator.com/item?id=4088941.

adrianmacneil 11y ago
Interesting. I just stumbled across this and thought it made for amazing reading, considering how much has changed in just 3 years.
- dang 11y ago
  No kidding. "Uber" appears nowhere in the article.
  - tdylan 11y ago
    This was right around the time Uber realised what their UberX could be, after seeing Lyft's system be left alone.

gambiting 11y ago

What I don't understand is, why are they allowed to sell the medallions at all? The problems with the medallion system stems from the fact that due to supply/demand problem, their prices skyrocketed. But they should quite simply be non-transferable.

jws 11y ago
If you made medallions nontransferrable then you would see each medallion be owned by its own individual corporation, then the corporation would be sold instead of the medallion. A fixed term license would be a better idea.
- jonlucc 11y ago
  If I remember correctly from this[1] Planet Money podcast about a man who owns many medallions, the guy does have separate company names for each medallion. http://www.npr.org/sections/money/2015/07/31/428157211/episode-643-the-taxi-king http://www.npr.org/sections/money/2015/07/31/428157211/episo...
- Someone 11y ago
  If the government only hands out new ones that cannot be sold to humans that problem cannot occur.
cpwright 11y ago
I think they should be transferable, but they should only last for 5 years or some other reasonable fixed term. Make it long enough that there is some stability; but not so long that it becomes something that is like a real estate or mineral rights investment. Let the city auction the fraction of them that come up for renewal each year; so that instead of a private entity making money off a scarce city resource the city would.
johnward 11y ago
It seems like they should have either used the medallion or returned it to the government. How do we fix it now though? Does the government get rid of medallions? Does someone refund the people who bought them? It's pretty clear people prefer the uber model but the cabs do have at least on reason to be mad, the medallions they bought to comply with regulations.
- merpnderp 11y ago
  Why should taxpayers bail them out? They bought into a monopoly and that's like paying the teacher a bribe so you can take other kids' lunch money. This is a perfect example of corporatism, and should not be rewarded with a soft landing when it fails.
  - johnward 11y ago
    We don't have too. We could just say "you must have a medallion to operate a cab". They secondary market drove up the prices so I guess it doesn't make sense to have the gov reimburse them. If there was no secondary market then it might.
imglorp 11y ago
In kleptocracies like Philly, there's similar game called "pay to play," where anyone wanting to bid on a city contract has to make some administrator happy in some personalized way. City admins routinely go to jail for this.

pcurve 11y ago

Price is dropping fast. http://nycitycab.com/business/taximedallionlist.aspx http://nycitycab.com/business/taximedallionlist.aspx. Current owners are putting it up for sale for less than $600,000. I guess it's uber effect.

Gustomaximus 11y ago
To save you looking it up, prices peaked in 2011 @ $1 million for a medallion. Interestingly corporate medallions are now pushing toward $1 million ($280k in 2004). And if the 13,347 medallions were once valued at $1mil and now $600k that's a $5.3 billion paper loss. Ouch https://en.wikipedia.org/wiki/Taxicabs_of_New_York_City#Medallions https://en.wikipedia.org/wiki/Taxicabs_of_New_York_City#Meda...
- Retric 11y ago
  Medallions are a productive asset, so 5.3 billion is somewhat disingenuous.
  - deleted 11y ago
    [deleted]
  - mathgeek 11y ago
    Wouldn't the current and future production be factored into the price, though? I'd have to guess that 5.3 billion is a low estimate for actual losses if you owned one of these in 2011 and still hold it.
    - Retric 11y ago
      Your double counting the returns as future cash flows are already factored into the sale price. Suppose you had a bond worth 2$ that paid out 1$ and is now worth 1$. That's not a paper loss of 1$. PS: At the last auction, in 2008, the opening bid was $189,000, and medallions sold for as little as $226,000. http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/ http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/ In total, TLC will be auctioning off 2,000 new medallions, 40 percent of them to drivers. (January 20, 2014) that's a significant part of the price drop.

adrianmacneil 11y ago

> “A taxi medallion system is nearly impossible to end even if it proves to be providing unfairly high gains to a limited number of original medallion owners,” the report concluded. “Medallion owners fiercely resist any possible threat that may challenge their advantage.” It's crazy how defeatist they sound in this article. Little did they know that in just 3 years companies would be struggling to get rid of their medallions, and the taxi lobby would be in ruins.