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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

by 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.

by ahepp 6y ago

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.