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Artificially limiting the supply of taxis seems like a silly thing to do in the first place. It's not surprising that it didn't work out well.

kevingadd 7y ago
Does that actually have anything to do with the problem in the article though? It seems like a standard case of opportunists pulling a pump-and-dump scam to get rich at the cost of victims, and in this case the asset was taxi medallions. You can do that kind of scam on all sorts of things. The guy in the article who took out a loan to buy 15 medallions is an obvious victim of a pump and dump scam: He did something really naive in the hopes of a big investment win. The fact that it happened to be cab medallions isn't particularly important, if it wasn't those it could have been crypto or foreign currency or penny stocks just as easily.
- DennisP 7y ago
  Seems fairly obvious: you can't pump and dump the medallions if there are no medallions.
  - _nalply 7y ago
    No, but there are other ways or other business areas. Pump and dump is easier with medallions but don't believe that pump and dump is abolished together with medallions.
CPLX 7y ago
Might make sense to invoke Chesterton’s fence a little here. The reason those rules came into effect was that there was a boom and crash tendency, so there would be way way too many taxis, nobody would make a living as a result, then they’d all go out of business and there would be too few.
- DennisP 7y ago
  Then it seems that would be a problem today, now that we also have Uber and Lyft. But really, I don't see what's unique about the taxi market as opposed to any other market, where we don't put a limit on supply and things work out just fine.
  - cameronbrown 7y ago
    Roads are a public resources and have limits, otherwise you'll end up with a situation where the road is dominated exclusively by private business.
    - saimiam 7y ago
      This is exactly what’s happening in cities across the world including suburban Mumbai, where I live. Ride shares like Uber and Ola, a myriad delivery services, and privately owned rickshaws are choking the city. We’ve basically handed the city roads over to last mile logistics and ride share companies to the extent that one can’t safely drive in the city because everyone else on the road has a delivery/pickup deadline to meet. It has gotten to point when I get calls from people I barely know asking me to teach them how to drive so that they can work for Ola/Uber/Last mile logistics. Eventually, we’re all going to become shut ins because the alternative is to risk life and limb trying to share the road with people who are trying to play chicken with each other just to get somewhere a minute earlier.
  - CPLX 7y ago
    It is a problem today. Evidence suggests that the market clearing price for taxi services is below the subsistence level for the people doing it, and above a tolerable level of cars and congestion. Your basic premise is also unsound. Markets produce failures and unstable situations constantly, and the government steps in to address what would otherwise be a market failure. We license hairdressers and financial planners, we inspect airplanes and meat, and a million other things. In nearly every case it’s for the same reason we regulate taxis, which is that we tried not regulating it and were unhappy with the outcomes.
Wowfunhappy 7y ago
Well, I can think of at least one good reason for a medallion system: it helps limit the number of cars on the road. (Let's ignore Uber and Lyft—they are taxis and should need medallions, but we're not enforcing the law properly.) Of course, it would help a great deal if the medallion system were combined with limits on private vehicles...
- briandear 7y ago
  Maybe people need medallions? If you don’t have a medallion then you have to return to the place from which you came. There would be fewer people on the roads and sidewalks. NYC sidewalks are too crowded and we should limit the number of people allowed to use them. The people-medallion system could be used in the Bay Area as well since housing is scarce. You could also require such a medallion to work and access public benefits. It seems like we do have such a system but we’re not enforcing the law properly.
- lotsofpulp 7y ago
  It’s a terrible way to limit the number of cars. A variable toll would be a much better way of limiting the number of vehicles.
  - ineedasername 7y ago
    I hate the idea of "congestion pricing" tolls. Bridges & tunnels into NYC run $15. $300/month for daily commuters. I'm sure that's manageable for some commuters, but poorer folks are disproportionately impacted and it significantly raised bus fair as well: About $260/month for most routes that are only 10-15 miles outside of NYC. I think better mass transit options are a better option to reduce congestion, and therefore the need for congestion pricing.
    - lotsofpulp 7y ago
      Mass transit is not an option in the next decade. And the solution to prices impacting poor people is to give poor people money, not to remove the mechanism by which resources get allocated (transparent pricing).
Gibbon1 7y ago
Some of my friends drove cabs. The problem is the business like a lot of businesses doesn't naturally lend itself to people being able to make an honest living without regulation.

kevingadd 7y ago

Does that actually have anything to do with the problem in the article though? It seems like a standard case of opportunists pulling a pump-and-dump scam to get rich at the cost of victims, and in this case the asset was taxi medallions. You can do that kind of scam on all sorts of things. The guy in the article who took out a loan to buy 15 medallions is an obvious victim of a pump and dump scam: He did something really naive in the hopes of a big investment win. The fact that it happened to be cab medallions isn't particularly important, if it wasn't those it could have been crypto or foreign currency or penny stocks just as easily.

DennisP 7y ago
Seems fairly obvious: you can't pump and dump the medallions if there are no medallions.
- _nalply 7y ago
  No, but there are other ways or other business areas. Pump and dump is easier with medallions but don't believe that pump and dump is abolished together with medallions.

CPLX 7y ago

Might make sense to invoke Chesterton’s fence a little here. The reason those rules came into effect was that there was a boom and crash tendency, so there would be way way too many taxis, nobody would make a living as a result, then they’d all go out of business and there would be too few.

DennisP 7y ago
Then it seems that would be a problem today, now that we also have Uber and Lyft. But really, I don't see what's unique about the taxi market as opposed to any other market, where we don't put a limit on supply and things work out just fine.
- cameronbrown 7y ago
  Roads are a public resources and have limits, otherwise you'll end up with a situation where the road is dominated exclusively by private business.
  - saimiam 7y ago
    This is exactly what’s happening in cities across the world including suburban Mumbai, where I live. Ride shares like Uber and Ola, a myriad delivery services, and privately owned rickshaws are choking the city. We’ve basically handed the city roads over to last mile logistics and ride share companies to the extent that one can’t safely drive in the city because everyone else on the road has a delivery/pickup deadline to meet. It has gotten to point when I get calls from people I barely know asking me to teach them how to drive so that they can work for Ola/Uber/Last mile logistics. Eventually, we’re all going to become shut ins because the alternative is to risk life and limb trying to share the road with people who are trying to play chicken with each other just to get somewhere a minute earlier.
- CPLX 7y ago
  It is a problem today. Evidence suggests that the market clearing price for taxi services is below the subsistence level for the people doing it, and above a tolerable level of cars and congestion. Your basic premise is also unsound. Markets produce failures and unstable situations constantly, and the government steps in to address what would otherwise be a market failure. We license hairdressers and financial planners, we inspect airplanes and meat, and a million other things. In nearly every case it’s for the same reason we regulate taxis, which is that we tried not regulating it and were unhappy with the outcomes.

Wowfunhappy 7y ago

Well, I can think of at least one good reason for a medallion system: it helps limit the number of cars on the road. (Let's ignore Uber and Lyft—they are taxis and should need medallions, but we're not enforcing the law properly.) Of course, it would help a great deal if the medallion system were combined with limits on private vehicles...

briandear 7y ago
Maybe people need medallions? If you don’t have a medallion then you have to return to the place from which you came. There would be fewer people on the roads and sidewalks. NYC sidewalks are too crowded and we should limit the number of people allowed to use them. The people-medallion system could be used in the Bay Area as well since housing is scarce. You could also require such a medallion to work and access public benefits. It seems like we do have such a system but we’re not enforcing the law properly.
lotsofpulp 7y ago
It’s a terrible way to limit the number of cars. A variable toll would be a much better way of limiting the number of vehicles.
- ineedasername 7y ago
  I hate the idea of "congestion pricing" tolls. Bridges & tunnels into NYC run $15. $300/month for daily commuters. I'm sure that's manageable for some commuters, but poorer folks are disproportionately impacted and it significantly raised bus fair as well: About $260/month for most routes that are only 10-15 miles outside of NYC. I think better mass transit options are a better option to reduce congestion, and therefore the need for congestion pricing.
  - lotsofpulp 7y ago
    Mass transit is not an option in the next decade. And the solution to prices impacting poor people is to give poor people money, not to remove the mechanism by which resources get allocated (transparent pricing).

Gibbon1 7y ago

Some of my friends drove cabs. The problem is the business like a lot of businesses doesn't naturally lend itself to people being able to make an honest living without regulation.