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> The fact of the matter is that there is a set minimum cost to doing business in the taxi trade. This cost includes such items as hourly rates for drivers, ser

> The fact of the matter is that there is a set minimum cost to doing business in the taxi trade. This cost includes such items as hourly rates for drivers, servicing costs for vehicles, insurance, licence fees etc. I think the "license fees" for taxis has evolved [1] into a suboptimal market system that is difficult to unwind: > The medallion system is a government-created intentional constraint on the supply of taxicabs, and since historically cities have increased the number of medallions much more slowly than the growth in demand for taxis, medallions have generally been considered a great investment; though recently the increased supply of cars for hire created by ridesharing companies has been eroding the value of medallions. [1] https://en.wikipedia.org/wiki/Taxi_medallion https://en.wikipedia.org/wiki/Taxi_medallion

908B64B197 6y ago
> medallions have generally been considered a great investment; I'd put a citation needed on that. There's nothing that keep a city from doubling the number of medallions available, other than some shady lobbying groups. There's a reason most banks shy away from these assets (and those who touch is consider them extremely volatile assets).
- SilasX 6y ago
  Maybe they shy away now, but I remember reading that banks used to view them as valid collateral for loans. From a 2019 NYT article (open a new browser container): >They said some drivers were happy to use climbing medallion values as collateral to take out cash, and that those who sold their medallions at the height of the market made money. >The lenders said they believed medallion values would keep increasing, as they almost always had. No one, they said, could have predicted Uber and Lyft would emerge to undercut the business. https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medallions-suicides.html https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medall...
  - 908B64B197 6y ago
    Some banks did. But I seriously doubt they treated them like real estate when pricing the risk on them.
ahepp 6y ago
I recall an article in the nyt[0] about the very sad outcomes related to this market. Government regulation creates a massive synthetic asset. A market appears around the asset. Predatory subprime lending to people who don't understand the risk. The asset price bursts, a bunch of poor taxi drivers are left holding the bag, often not understanding their rights and liabilities. Not to mention the thugs lenders have hired to recover the sketchy debts. [0] https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medallions-suicides.html https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medall...
- 908B64B197 6y ago
  Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid). The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it.
  - ahepp 6y ago
    Yeah, I think the capital investment situation has certainly improved greatly. The labor situation is still very concerning to me. I'm sure it was awful even before uber, but there's a bit of "the devil you know" vs "the devil that will exploit you in a new and terrifying way"
    - 908B64B197 6y ago
      The issue is: The qualifications needed are basically to be 18 and own a valid driver's license. The labor pool is basically infinite. So naturally offer and demand will dominates the market and an equilibrium will be reached where it's barely profitable to drive. Cities tried to set minimum prices for rides, which in turn reduced the amount of rides so an other equilibrium point was achieved.

908B64B197 6y ago

> medallions have generally been considered a great investment; I'd put a citation needed on that. There's nothing that keep a city from doubling the number of medallions available, other than some shady lobbying groups. There's a reason most banks shy away from these assets (and those who touch is consider them extremely volatile assets).

SilasX 6y ago
Maybe they shy away now, but I remember reading that banks used to view them as valid collateral for loans. From a 2019 NYT article (open a new browser container): >They said some drivers were happy to use climbing medallion values as collateral to take out cash, and that those who sold their medallions at the height of the market made money. >The lenders said they believed medallion values would keep increasing, as they almost always had. No one, they said, could have predicted Uber and Lyft would emerge to undercut the business. https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medallions-suicides.html https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medall...
- 908B64B197 6y ago
  Some banks did. But I seriously doubt they treated them like real estate when pricing the risk on them.

ahepp 6y ago

I recall an article in the nyt[0] about the very sad outcomes related to this market. Government regulation creates a massive synthetic asset. A market appears around the asset. Predatory subprime lending to people who don't understand the risk. The asset price bursts, a bunch of poor taxi drivers are left holding the bag, often not understanding their rights and liabilities. Not to mention the thugs lenders have hired to recover the sketchy debts. [0] https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medallions-suicides.html https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medall...

908B64B197 6y ago
Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid). The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it.
- ahepp 6y ago
  Yeah, I think the capital investment situation has certainly improved greatly. The labor situation is still very concerning to me. I'm sure it was awful even before uber, but there's a bit of "the devil you know" vs "the devil that will exploit you in a new and terrifying way"
  - 908B64B197 6y ago
    The issue is: The qualifications needed are basically to be 18 and own a valid driver's license. The labor pool is basically infinite. So naturally offer and demand will dominates the market and an equilibrium will be reached where it's barely profitable to drive. Cities tried to set minimum prices for rides, which in turn reduced the amount of rides so an other equilibrium point was achieved.