4 ms·

"When obsolete government practices persist, they tend to be pretty sinister." How might you propose to compensate people who, in good faith, bought taxi medal

by larrys 14y ago

"When obsolete government practices persist, they tend to be pretty sinister." How might you propose to compensate people who, in good faith, bought taxi medallions (a legal practice)? (Or do you feel that's not necessary?)

rhizome 14y ago
Here in SF they are illegal to sell and must be issued to a person (not a company). People get on the waiting list, get their turn, then rent them to taxi companies for (I believe) ~$100K/yr. Many medallion owners have not driven a cab in years, or never have.
schiffern 14y ago
The article said it pretty well. >So, medallion holders speculated in holding a government asset and lost. Some of these people are also taxi drivers or operators of taxi dispatch companies. Like Greek bondholders, they gambled and lost big.
- larrys 14y ago
  "So, medallion holders speculated" Don't agree with that at all that is what the article says. (It doesn't match up with my definition either based on my years of business experience either.) Definition of "speculation" from investopedia: "The act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain." Based on history there is no reason to believe that the purchase of a taxi medallion could result reasonably in losing "most or all" of the initial outlay. (Unless of course you decided to buy one while ignoring the current events going on of course). http://www.investopedia.com/terms/s/speculation.asp http://www.investopedia.com/terms/s/speculation.asp Of course you can make any investment or purchase speculative depending on how much of a chance you want to take. If you decide to get in on an up and coming area in real estate (a run down area that you hope will change over the course of many years) that could easily be seen as speculation. Otoh, buying a condo in a well established neighborhood that has a history would not be seen as speculation which is not the same as saying that you bought because you felt that the value could double and if that doesn't happen you may feel you have "lost" something (the high gain you expected). Even in the case of eminent domain taking of property for public good the property owners are compensated somewhat fairly for the loss of value of their property. The government doesn't come along and say "hey we need this area for a road sorry guys to bad it happened to you". I would go further to say that these medallion owners would band together and at least attempt to do whatever they could legally to find a way to prevent something like this from happening if they could. Why? There is enough money involved to pay lawyers to muck up the process or delay it (just like with eminent domain, people even if there is compensation, will do that.)
  - mikeash 14y ago
    The comparison with eminent domain is interesting. If the government abolished taxi medallions, are they really taking something from those who own them? The medallion is basically the right to operate a taxi. If the government abolished medallions, then they'd still have the right to operate a taxi, it's just that a lot of other people would too. Obviously they lose a major competitive edge, but strictly speaking, the government hasn't taken any property here. The best comparison I can think of involving real property would be owning a private tract of land in a valuable area that's almost all owned and unused by the government. One day, the government decides to sell its land. The value of your land plummets. It's still valuable due to whatever intrinsic wealth it has, but the new glut of supply makes it much less valuable. Is the government obligated to compensate you for that loss of value when they sell their land? I'd think not.
  - baddox 14y ago
    > Based on history there is no reason to believe that the purchase of a taxi medallion could result reasonably in losing "most or all" of the initial outlay. This is always the case before an asset loses value for the first time.
  - rdtsc 14y ago
    > "The act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain." Based on recent history no. But maybe based on longer history? Imagine a pandemic that wipes our a large # of population, now taxi medallions for whatever reason are not that important so they drop in value. Medallion system is sustain by the laws. Laws can change. The bet is that the laws own't change drastically but that is just a "speculation". Government is nice enough to offer a compensation in eminent domain, but they don't have to. What if they don't? What would you do? Sue them? You can't. Gather a militia and march towards the White House or the Senate building? If you had asked someone 20-30 years or so ago. "Do you imagine government one day will be able to store and read all your communications, telephone, mail?" Most people would have bet it would never happen because of Free Speech and it was just something we made fun of other corrupt and evil countries of doing. Yet here we are today. If you'd somehow made a financial bet against it, it would be a losing bet.
argumentum 14y ago
How might you propose to compensate people who, in good faith, bought taxi medallions I'm sure the following question was asked many times to abolitionists: How might you propose to compensate people who, in good faith, bought other people
- enf 14y ago
  It seems as disturbing to me as it apparently does to you, but it was recently in the news that the UK actually did a buyout when they abolished slavery. http://www.independent.co.uk/news/uk/home-news/britains-colonial-shame-slaveowners-given-huge-payouts-after-abolition-8508358.html http://www.independent.co.uk/news/uk/home-news/britains-colo...
  - argumentum 14y ago
    It's a tricky situation, philosophically. This may have helped the UK abolish slavery sooner (a good outcome), but its morally and legally dubious. This was suggested many times during the lead-up to the Civil War, but (I think rightly) Lincoln as well as the more hard-core abolitionists viewed this strategy as contradicting their position that Slavery was a crime against Natural Law.
    - baddox 14y ago
      Lincoln's strategy required the forced labor (and for some, subsequent deaths) of tens of thousands of people. The irony of conscription wasn't lost on Americans at the time either, and the military drafts were extremely unpopular on both sides.
      - argumentum 14y ago
        Lincoln's strategy itself was "required* because slave-owners and slave-owning states would not give up their slaves without a fight. Blame them, not Lincoln. Lincoln himself was well aware of the costs that would be imposed by war, but chose this course of action due to the absurdly perverse nature of slavery. http://www.bartleby.com/124/pres32.html http://www.bartleby.com/124/pres32.html
stormbrew 14y ago
I think you need to go back to the premise here a bit. The scarcity of taxi medallions was not a feature of their original purpose (to protect riders from unsafe drivers), but a corruption of it (to provide risk-limited profit to the existing holders of them). I would expect that the profit stream off a medallion is effectively greater than that of any other risk-limited or risk-free investment in a government asset (bonds and such) or they wouldn't be in such great demand even at their vastly inflated prices. So is, perhaps, the decades of extra profit not compensation enough? Maybe recent buyers have some claim to have had the value of the instrument disrupted, but anyone who's been leaching this system for decades should frankly be happy that the government (and by extension society as a whole) propped them up for so long. At any rate I expect there would be a gradual expansion of the number of medallions on the market until it was an unrestricted license just like any other, at which point trading or transferring them would become illegal. This would provide some ability for holders to get some of their value back as it lowered.
bradleyjg 14y ago
I don't think there's a vested property right in them, but even if there is, there isn't in their scarcity. The government could issue medallions to all comers instead of abolishing the existing one.
patrickgzill 14y ago
Immediate compensation could be to allow "face value plus 5%" of the medallion to be used to pay any local/city taxes, with say 7 or 10 years given to use the credit. The IRS rules http://www.irs.gov/publications/p535/ch08.html http://www.irs.gov/publications/p535/ch08.html state you have to amortize/depreciate the license over 15 years (180 months). So, any licenses that are 16 or more years old, have already been written off in full, so, a lesser amount would be needed to compensate the owners.

by larrys 14y ago

rhizome 14y ago

Here in SF they are illegal to sell and must be issued to a person (not a company). People get on the waiting list, get their turn, then rent them to taxi companies for (I believe) ~$100K/yr. Many medallion owners have not driven a cab in years, or never have.

schiffern 14y ago

The article said it pretty well. >So, medallion holders speculated in holding a government asset and lost. Some of these people are also taxi drivers or operators of taxi dispatch companies. Like Greek bondholders, they gambled and lost big.

larrys 14y ago
"So, medallion holders speculated" Don't agree with that at all that is what the article says. (It doesn't match up with my definition either based on my years of business experience either.) Definition of "speculation" from investopedia: "The act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain." Based on history there is no reason to believe that the purchase of a taxi medallion could result reasonably in losing "most or all" of the initial outlay. (Unless of course you decided to buy one while ignoring the current events going on of course). http://www.investopedia.com/terms/s/speculation.asp http://www.investopedia.com/terms/s/speculation.asp Of course you can make any investment or purchase speculative depending on how much of a chance you want to take. If you decide to get in on an up and coming area in real estate (a run down area that you hope will change over the course of many years) that could easily be seen as speculation. Otoh, buying a condo in a well established neighborhood that has a history would not be seen as speculation which is not the same as saying that you bought because you felt that the value could double and if that doesn't happen you may feel you have "lost" something (the high gain you expected). Even in the case of eminent domain taking of property for public good the property owners are compensated somewhat fairly for the loss of value of their property. The government doesn't come along and say "hey we need this area for a road sorry guys to bad it happened to you". I would go further to say that these medallion owners would band together and at least attempt to do whatever they could legally to find a way to prevent something like this from happening if they could. Why? There is enough money involved to pay lawyers to muck up the process or delay it (just like with eminent domain, people even if there is compensation, will do that.)
- mikeash 14y ago
  The comparison with eminent domain is interesting. If the government abolished taxi medallions, are they really taking something from those who own them? The medallion is basically the right to operate a taxi. If the government abolished medallions, then they'd still have the right to operate a taxi, it's just that a lot of other people would too. Obviously they lose a major competitive edge, but strictly speaking, the government hasn't taken any property here. The best comparison I can think of involving real property would be owning a private tract of land in a valuable area that's almost all owned and unused by the government. One day, the government decides to sell its land. The value of your land plummets. It's still valuable due to whatever intrinsic wealth it has, but the new glut of supply makes it much less valuable. Is the government obligated to compensate you for that loss of value when they sell their land? I'd think not.
- baddox 14y ago
  > Based on history there is no reason to believe that the purchase of a taxi medallion could result reasonably in losing "most or all" of the initial outlay. This is always the case before an asset loses value for the first time.
- rdtsc 14y ago
  > "The act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain." Based on recent history no. But maybe based on longer history? Imagine a pandemic that wipes our a large # of population, now taxi medallions for whatever reason are not that important so they drop in value. Medallion system is sustain by the laws. Laws can change. The bet is that the laws own't change drastically but that is just a "speculation". Government is nice enough to offer a compensation in eminent domain, but they don't have to. What if they don't? What would you do? Sue them? You can't. Gather a militia and march towards the White House or the Senate building? If you had asked someone 20-30 years or so ago. "Do you imagine government one day will be able to store and read all your communications, telephone, mail?" Most people would have bet it would never happen because of Free Speech and it was just something we made fun of other corrupt and evil countries of doing. Yet here we are today. If you'd somehow made a financial bet against it, it would be a losing bet.

argumentum 14y ago

How might you propose to compensate people who, in good faith, bought taxi medallions I'm sure the following question was asked many times to abolitionists: How might you propose to compensate people who, in good faith, bought other people

enf 14y ago
It seems as disturbing to me as it apparently does to you, but it was recently in the news that the UK actually did a buyout when they abolished slavery. http://www.independent.co.uk/news/uk/home-news/britains-colonial-shame-slaveowners-given-huge-payouts-after-abolition-8508358.html http://www.independent.co.uk/news/uk/home-news/britains-colo...
- argumentum 14y ago
  It's a tricky situation, philosophically. This may have helped the UK abolish slavery sooner (a good outcome), but its morally and legally dubious. This was suggested many times during the lead-up to the Civil War, but (I think rightly) Lincoln as well as the more hard-core abolitionists viewed this strategy as contradicting their position that Slavery was a crime against Natural Law.
  - baddox 14y ago
    Lincoln's strategy required the forced labor (and for some, subsequent deaths) of tens of thousands of people. The irony of conscription wasn't lost on Americans at the time either, and the military drafts were extremely unpopular on both sides.
    - argumentum 14y ago
      Lincoln's strategy itself was "required* because slave-owners and slave-owning states would not give up their slaves without a fight. Blame them, not Lincoln. Lincoln himself was well aware of the costs that would be imposed by war, but chose this course of action due to the absurdly perverse nature of slavery. http://www.bartleby.com/124/pres32.html http://www.bartleby.com/124/pres32.html

stormbrew 14y ago

I think you need to go back to the premise here a bit. The scarcity of taxi medallions was not a feature of their original purpose (to protect riders from unsafe drivers), but a corruption of it (to provide risk-limited profit to the existing holders of them). I would expect that the profit stream off a medallion is effectively greater than that of any other risk-limited or risk-free investment in a government asset (bonds and such) or they wouldn't be in such great demand even at their vastly inflated prices. So is, perhaps, the decades of extra profit not compensation enough? Maybe recent buyers have some claim to have had the value of the instrument disrupted, but anyone who's been leaching this system for decades should frankly be happy that the government (and by extension society as a whole) propped them up for so long. At any rate I expect there would be a gradual expansion of the number of medallions on the market until it was an unrestricted license just like any other, at which point trading or transferring them would become illegal. This would provide some ability for holders to get some of their value back as it lowered.

bradleyjg 14y ago

I don't think there's a vested property right in them, but even if there is, there isn't in their scarcity. The government could issue medallions to all comers instead of abolishing the existing one.

patrickgzill 14y ago

Immediate compensation could be to allow "face value plus 5%" of the medallion to be used to pay any local/city taxes, with say 7 or 10 years given to use the credit. The IRS rules http://www.irs.gov/publications/p535/ch08.html http://www.irs.gov/publications/p535/ch08.html state you have to amortize/depreciate the license over 15 years (180 months). So, any licenses that are 16 or more years old, have already been written off in full, so, a lesser amount would be needed to compensate the owners.