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> Sohan Gill once saw his medallion as such a good investment — ”better than a house” If something looks like it's an impossibly good investment, it may actual
by troydavis 9y ago
> Sohan Gill once saw his medallion as such a good investment — ”better than a house”
If something looks like it's an impossibly good investment, it may actually be.
It's a shame that US city governments let this happen by retaining the medallion monopoly system. If cities let the taxi supply adjust to demand, a taxi license would have been worth the same as any other business license.
- api 9y agoThey do the same thing with housing. If supply adjusted to demand a starter house would not be 500k to 1m. Nothing about it costs that much.
- ProblemFactory 9y agoEven if cities decided that it is in their best interest to limit the number of taxi drivers, there is no good reason why the license should be transferable property that can be bought, sold and rented. If a taxi driver quits, the city, and not the previous driver should choose who is the best candidate to replace them.
- brandur 9y agoLikewise, we should have seen the rise of middlemen who put up the capital to buy medallions, rehire drivers at suppressed wages, and proceed to collect rent forever, as bad. This is essentially the same problem that we see reoccurring everywhere in modern society. We put in a system that seemed like a good idea, but after some time being exercised in reality, turns out to have some serious flaws. Fixing those flaws is so time consuming and expensive that it becomes a bureaucratic impossibility. The result is that the profits pass onto the few, and everyone else suffers for it. (e.g. politician buying in Washington, software patents, prop 13 in California, etc.)
- delazeur 9y ago> If something looks like it's an impossibly good investment, it may actually be. Probably not a fair criticism of the investor in this case. 20 years ago, it would have been a totally accurate assessment.
- troydavis 9y agoThe risk/outcome - that the taxi supply becomes responsive to taxi demand and licenses/medallions become worthless - has existed as long as medallions have. While the risk is hard to forecast and thus price, it's not new. Investors succeed by pricing risk and investors who bought in 2013 significantly mis-priced this risk, so criticism seems reasonable.
- tim333 9y agoTrouble is if you don't regulate taxi numbers under the old system you end up with 30 taxis hanging out in the same prime location fighting over customers and causing congestion. Hailing apps solve that problem.