8 ms·

Taxi medallions have been the best investment. Now Uber may be changing that

64 points by nthitz 12y ago

higherpurpose 12y ago
Taxi medallions have also been a great barrier to entry in the taxi business. John Stossel investigated this a while ago: http://youtu.be/anKCO99_O8s?t=1m53s http://youtu.be/anKCO99_O8s?t=1m53s
- astazangasta 12y ago
  Ugh, Stossel. Taxi deregulation has been done many times before. Try this: http://toomanytaxis.com/2009/01/taxi-deregulation-brings-only-regret/ http://toomanytaxis.com/2009/01/taxi-deregulation-brings-onl...
rahimnathwani 12y ago
How much can someone who already has their own car make doing Lyft, UberX or Sidecar? It might be a good option for empty-nesters who need extra cash but don't want to sell assets or dip into pension pots.
- autarch 12y ago
  I took UberX yesterday. The driver told me he used to be a cab driver and he loved Uber. He made more money and spent less time doing it. For reference, when he drove a cab he had to spend $600 per month to rent the car!
  - greenyoda 12y ago
    If you use your own car as a taxi, your depreciation, insurance and maintenance costs would also be significant.
- pjscott 12y ago
  There's a fairly detailed discussion of that, with numbers, here: https://www.quora.com/Ride-Sharing/How-much-does-the-average-Lyft-Sidecar-driver-make-per-hour-while-on-the-clock https://www.quora.com/Ride-Sharing/How-much-does-the-average... Most of the numbers quoted seem to be in the general neighborhood of $20/hour, more if you do it as a part-time thing during peak hours.
raverbashing 12y ago
"The threat to medallion owners isn’t that they’ll lose passengers to these services. It’s that they’ll lose drivers — who have been aggressively courted by Uber. “Without the drivers, we’re dead,” " Oh really? Please tell me again how people were thinking a gimmick that's valuable only because of a government imposed monopoly is a sound investment. The bubble is popping. And it would be interesting to ask why did the price started going up around the 2000s...
- chaz 12y ago
  > a gimmick that's valuable only because of a government imposed monopoly is a sound investment City streets are a limited public good. Aside from ensuring quality and consumer protection, regulation & limiting the number of taxis ensures that traffic can actually flow. A traffic consultant says that NYC's plan to add 2,000 medallions could slow down all traffic by 12% because taxis don't park -- they roam the streets constantly. http://www.npr.org/blogs/money/2012/07/31/157477611/does-new-york-city-need-more-taxis http://www.npr.org/blogs/money/2012/07/31/157477611/does-new...
  - raverbashing 12y ago
    The problem is not the regulation or limiting the available licenses per se, it's rather the ability to transfer or sell them. If the current license holder can't or won't use it for another year there's absolutely no reason he should be allowed to transfer his permit. The regulator should just keep a list of people interested in it and let the next one have his turn.
  - praxulus 12y ago
    If you limit taxis, more people will drive their own cars. To make up some numbers, if you want to take 2000 cars off the road, you might have to eliminate 2500 or 3000 medallions. Instead, traffic-limiting measures should target all vehicles using congestion tolls, gas taxes, vehicle taxes, or something more innovative.
  - greenyoda 12y ago
    I don't buy that analysis. In NYC, you don't need a medallion to operate a taxi - you only need one for a yellow taxi that can legally stop when hailed on the street. Having more medallion taxis just means that these taxis will take business away from the "black car" (reservation-driven) companies and from services like Uber (and those cars never park either - if they're not moving, they're not making money). Increasing the number of medallions won't magically increase the usage of taxis - the people who can afford them already use them, but for the vast majority of New Yorkers, the prices are way out of reach and they take public transit.
vaadu 12y ago
Just another business model that refuses to evolve. Driverless cars will be here soon enough and the model will have to change again. That's life. If history has proven anything, it is that evolution always wins.
- aagha 12y ago
  When driver-less cars come, Uber too will be redundant too. That's a while away though.
  - hibikir 12y ago
    At that point, something like Uber still makes sense as a centralized ride brokerage. Cab companies will have driverless cars that go everywhere, but on many cities, no company will have enough cars for you to just want to go to their website to request a ride. It becomes a mix of Expedia an an auction site. You say where you are, and where you want to go, and get bids from car companies that claim to be able to get to you in X time, and charge you Y to get to your destination. You get to pick. With automated cars, their bids are all by algorithm. I'd be shocked if the Uber people weren't thinking about this problem today.
    - waps 12y ago
      > At that point, something like Uber still makes sense as a centralized ride brokerage. Since this is such an obvious part of the business model, I don't think they will get the chance to do this. There's one thing people don't yet understand about robots in the public space. Who carries the responsibility for the driving, and for accidents ? Currently for normal cars this is shared between producer and driver. With self-driving cars both the producer and driver are one and the same company, and obviously the occupants won't feel a great sense of responsibility, they'll feel they are victims, for obvious reasons : they didn't do anything. So ownership and insurance of things don't make sense for driver less cars. Ownership of them doesn't make sense because the responsibility thing doesn't work if you don't allow the producer remote access to do anything they want to the car. Insurance doesn't make sense for similar reasons. So yes I'm sure the car companies will allow Uber to take part in some "affiliate" scheme, but I'd expect that to be the limit of their involvement.
hackaflocka 12y ago
I loved Nassim Nicholas Taleb's discussion of why being a taxi drive can be better than being a banker (Antifragile). This Uber stuff is throwing a twist into his conclusions.
lukasm 12y ago
The arguments about chaos without regulations is bullshit. There are proofs around the world. It's going to be very interesting to see how the industry will change. 1. Almost all will switch to Uber, Lyft etc. 2. Driveless cars take over. 3. Distributed network of driveless cars backed by bitcoin like transactions. No need for central logistics like Uber. What will happen first: 2 or 3
- saryant 12y ago
  Under 3, doesn't there still need to be a dispatch system?
crazy1van 12y ago
There's a kind of live by the sword, die by the sword theme here. If government rules can be enacted to make an item's value go up, they can also change to make the same item's value go down.
skosuri 12y ago
Am I the only person that thinks government regulation is a reasonable thing for the taxi industry? Regulations on work hours, car safety, tougher environmental standards, driver training, requiring pickup if called, etc all seem reasonable. It's unfair that Uber is able to skirt most of these rules. The same could be said for hotels (noise, safety regs, etc) and restaurants (food safety, etc). Should all services be unregulated? Anyways, I do think things like Uber and Airbnb are very cool and innovative, I just feel a little uncomfortable about where it's leading us to.
- Meekro 12y ago
  All the things you listed are perfectly reasonable. But, in some regions, the government deliberately issues too few medallions. This means consumers pay higher prices, and all that money goes to well-connected people who managed to get the medallions. Those people don't actually drive the taxis, they just take the money. Better regulation, like what you describe, seems better than no regulation, but I'd be willing to accept no taxi regulation if it gets rid of the political cronyism and high prices that go with it.
  - skosuri 12y ago
    I don't use Uber, but is it generally cheaper than taxis?
    - BrentOzar 12y ago
      > I don't use Uber, but is it generally cheaper than taxis? no, generally more expensive, but the product is way better. My girlfriend gets sick with exhaust vapors when typical cheap taxi drivers lave their windows open and insist their AC is broken. Taxi shocks are usually shot, and the ride crashes around on city streets. Uber has nice, comfy, clean, big, air conditioned vehicles. Worth the extra money.
      - silencio 12y ago
        I started to get sick on one of my last Uber rides because the driver had on an absurd amount of cologne. Another had no clue what he was doing and explicitly took the street he was told not to take, getting stuck in the traffic I was hoping to avoid. Some of them are really reckless about driving too, sometimes ignoring posted signs altogether, and I think the only saving grace is that the cars are usually brand new. I could go on about how much I have a problem with Uber, just like how much I hate taxis. The only nice thing about Uber here is that there's an easy way to get in touch and fix a problem. That for sure, I agree, is worth the cost. That being said, I've found UberX in SF is cheaper than cabs, so I have even less interest in taking cabs.... but the last few cities I went to like NYC and Miami, the cabs were great. Wish SFMTA would step it up...
nostromo 12y ago
Imagine if driver's licenses were treated the same way cities treat taxi licenses and liquor licenses. The number available is limited, so if you want a driver's license you have to wait for someone to die, and then buy the license from the estate. Since it's artificially scarce you'd have to pay a pretty penny to get one. Some companies might step in and buy up driver's licenses to rent them to drivers for only a few hundred dollars a month... Treating any form of license as transferable private property seems to be against the public interest.
- deleted 12y ago
  [deleted]
- Shivetya 12y ago
  rent stabilization seems to fit that bill.
  - michaelochurch 12y ago
    New York's rent stabilization isn't that bad, but it also doesn't have a major effect on rents, either for those who have it or those who don't. (Rent-stabilized apartments can go up by a few percent per year.) It's the 1947-era legacy rent control that is patently ridiculous. Most people underestimate the harm of that program because they don't understand price elasticity. It's true that only ~1-2% of apartments are under that system. However, 1-2% supply destruction can actually double prices. (See: oil shocks.) Another problem is that this country is run by scumbags and pussies who allow foreigners to own real estate (many countries don't). Now, I'm all for a reasonably open immigration policy, and letting foreigners live here is not the issue. (The people who move here to live here don't have a major effect on the rent, and are good for the country overall.) But the types of foreigners who buy U.S. real estate are usually corrupt officials who want a place to live if their own country brings them to trial. (In China, corruption is a death-penalty offense.) This is the real reason why Silicon Valley is so expensive: every fucking Communist Party scumbag in China and murdering Russian oligarch and Arab slave state billionaire has bought a place (even if it goes uninhabited) in California. It doesn't affect a large number of houses, strictly speaking, but it's enough of a margin to have massive impacts on the price level. I am amazed at Americans' willingness to be "patriotic" about stupid things and get into nonsensical wars... but then we go and let corrupt, murdering dictators and billionaires from all over the world buy California and Manhattan real estate. It's fucking disgusting.
refurb 12y ago
Anyone else find the graph of medallion values a little weird? Looking at the DJIA, It was ~11,700 in Jan 2000 and by March 2009 it was down to ~6,600. The graph makes it look like it was about 100% of what it was in 2000. That makes no sense. Also, they have the CPI plotted, but it's a straight line at 100. So they might be correcting for CPI, but in that case, you'd expect the 2009 DJIA to be even lower.
CamperBob2 12y ago
From the article: In February, he sued the city on behalf of medallion owners, brokers, managers, financiers and cab affiliations. The suit argues that the city has violated their rights by allowing new companies to provide an essentially identical transportation service without complying with existing regulation. By eliminating the exclusive right of medallion owners to provide that service, the suit argues, the city has taken away the thing that gives medallions their value as property under Illinois law. “If you think it’s an improvement to change the rules, maybe you can do that,” says Edward Feldman, a partner with Shakman. “But you have to provide compensation for the property rights you’re destroying. And that’s the Constitution.” Medallions represent a promise, he says. And on that promise, medallion owners took out mortgage-size loans. If the city backs out of that promise, it must make them whole. So, if I buy a fishing license but fail to catch any fish, can I sue my state's Department of Fish and Wildlife for a refund of my $50? I wonder what people would say if I tried?
- 7Figures2Commas 12y ago
  That's an invalid analogy. A valid analogy would be that you purchased a fishing license from your state's Department of Fish and Wildlife because you were told one was legally required to fish in a certain location, but the Department of Fish and Wildlife then failed to take action against others who began fishing in that same location without a license. Good idea or horrible idea, certain cities created licensing regimes that promised to protect taxi drivers from competition if they paid for medallions. Now that others are flouting the law and circumventing the licensing regime, the taxi drivers want their protection money back if they're not going to receive the protection they were promised.
  - xmodem 12y ago
    In terms of individual taxi drivers who took out massive loans this is a valid argument. In terms of the rent-seeking institutional investors who lobbied the government to create an asset class which diverts most of the profits away from the people actually doing the work and makes taxis more expensive for no return in public benefit. I have no issue with government regulation of the taxi industry - quite the opposite. Certainly I think that it's important to mandate vehicle safety inspections. But if taxi licenses are going to be supply constrained, they should be issued by the government for a flat fee on a first-come first-served, use-it-or-lose-it basis. They should only be purchasable by the driver that will be driving the taxi and they should not be transferrable.
MarkMc 12y ago
Why don't cities issue taxi licences for 1 or 3 years, instead of permanent medallions?

64 points by nthitz 12y ago

Taxi medallions have also been a great barrier to entry in the taxi business. John Stossel investigated this a while ago: http://youtu.be/anKCO99_O8s?t=1m53s http://youtu.be/anKCO99_O8s?t=1m53s

astazangasta 12y ago
Ugh, Stossel. Taxi deregulation has been done many times before. Try this: http://toomanytaxis.com/2009/01/taxi-deregulation-brings-only-regret/ http://toomanytaxis.com/2009/01/taxi-deregulation-brings-onl...

rahimnathwani 12y ago

How much can someone who already has their own car make doing Lyft, UberX or Sidecar? It might be a good option for empty-nesters who need extra cash but don't want to sell assets or dip into pension pots.

autarch 12y ago
I took UberX yesterday. The driver told me he used to be a cab driver and he loved Uber. He made more money and spent less time doing it. For reference, when he drove a cab he had to spend $600 per month to rent the car!
- greenyoda 12y ago
  If you use your own car as a taxi, your depreciation, insurance and maintenance costs would also be significant.
pjscott 12y ago
There's a fairly detailed discussion of that, with numbers, here: https://www.quora.com/Ride-Sharing/How-much-does-the-average-Lyft-Sidecar-driver-make-per-hour-while-on-the-clock https://www.quora.com/Ride-Sharing/How-much-does-the-average... Most of the numbers quoted seem to be in the general neighborhood of $20/hour, more if you do it as a part-time thing during peak hours.

raverbashing 12y ago

"The threat to medallion owners isn’t that they’ll lose passengers to these services. It’s that they’ll lose drivers — who have been aggressively courted by Uber. “Without the drivers, we’re dead,” " Oh really? Please tell me again how people were thinking a gimmick that's valuable only because of a government imposed monopoly is a sound investment. The bubble is popping. And it would be interesting to ask why did the price started going up around the 2000s...

chaz 12y ago
> a gimmick that's valuable only because of a government imposed monopoly is a sound investment City streets are a limited public good. Aside from ensuring quality and consumer protection, regulation & limiting the number of taxis ensures that traffic can actually flow. A traffic consultant says that NYC's plan to add 2,000 medallions could slow down all traffic by 12% because taxis don't park -- they roam the streets constantly. http://www.npr.org/blogs/money/2012/07/31/157477611/does-new-york-city-need-more-taxis http://www.npr.org/blogs/money/2012/07/31/157477611/does-new...
- raverbashing 12y ago
  The problem is not the regulation or limiting the available licenses per se, it's rather the ability to transfer or sell them. If the current license holder can't or won't use it for another year there's absolutely no reason he should be allowed to transfer his permit. The regulator should just keep a list of people interested in it and let the next one have his turn.
- praxulus 12y ago
  If you limit taxis, more people will drive their own cars. To make up some numbers, if you want to take 2000 cars off the road, you might have to eliminate 2500 or 3000 medallions. Instead, traffic-limiting measures should target all vehicles using congestion tolls, gas taxes, vehicle taxes, or something more innovative.
- greenyoda 12y ago
  I don't buy that analysis. In NYC, you don't need a medallion to operate a taxi - you only need one for a yellow taxi that can legally stop when hailed on the street. Having more medallion taxis just means that these taxis will take business away from the "black car" (reservation-driven) companies and from services like Uber (and those cars never park either - if they're not moving, they're not making money). Increasing the number of medallions won't magically increase the usage of taxis - the people who can afford them already use them, but for the vast majority of New Yorkers, the prices are way out of reach and they take public transit.

vaadu 12y ago

Just another business model that refuses to evolve. Driverless cars will be here soon enough and the model will have to change again. That's life. If history has proven anything, it is that evolution always wins.

aagha 12y ago
When driver-less cars come, Uber too will be redundant too. That's a while away though.
- hibikir 12y ago
  At that point, something like Uber still makes sense as a centralized ride brokerage. Cab companies will have driverless cars that go everywhere, but on many cities, no company will have enough cars for you to just want to go to their website to request a ride. It becomes a mix of Expedia an an auction site. You say where you are, and where you want to go, and get bids from car companies that claim to be able to get to you in X time, and charge you Y to get to your destination. You get to pick. With automated cars, their bids are all by algorithm. I'd be shocked if the Uber people weren't thinking about this problem today.
  - waps 12y ago
    > At that point, something like Uber still makes sense as a centralized ride brokerage. Since this is such an obvious part of the business model, I don't think they will get the chance to do this. There's one thing people don't yet understand about robots in the public space. Who carries the responsibility for the driving, and for accidents ? Currently for normal cars this is shared between producer and driver. With self-driving cars both the producer and driver are one and the same company, and obviously the occupants won't feel a great sense of responsibility, they'll feel they are victims, for obvious reasons : they didn't do anything. So ownership and insurance of things don't make sense for driver less cars. Ownership of them doesn't make sense because the responsibility thing doesn't work if you don't allow the producer remote access to do anything they want to the car. Insurance doesn't make sense for similar reasons. So yes I'm sure the car companies will allow Uber to take part in some "affiliate" scheme, but I'd expect that to be the limit of their involvement.

hackaflocka 12y ago

I loved Nassim Nicholas Taleb's discussion of why being a taxi drive can be better than being a banker (Antifragile). This Uber stuff is throwing a twist into his conclusions.

lukasm 12y ago

The arguments about chaos without regulations is bullshit. There are proofs around the world. It's going to be very interesting to see how the industry will change. 1. Almost all will switch to Uber, Lyft etc. 2. Driveless cars take over. 3. Distributed network of driveless cars backed by bitcoin like transactions. No need for central logistics like Uber. What will happen first: 2 or 3

saryant 12y ago
Under 3, doesn't there still need to be a dispatch system?

crazy1van 12y ago

There's a kind of live by the sword, die by the sword theme here. If government rules can be enacted to make an item's value go up, they can also change to make the same item's value go down.

skosuri 12y ago

Am I the only person that thinks government regulation is a reasonable thing for the taxi industry? Regulations on work hours, car safety, tougher environmental standards, driver training, requiring pickup if called, etc all seem reasonable. It's unfair that Uber is able to skirt most of these rules. The same could be said for hotels (noise, safety regs, etc) and restaurants (food safety, etc). Should all services be unregulated? Anyways, I do think things like Uber and Airbnb are very cool and innovative, I just feel a little uncomfortable about where it's leading us to.

Meekro 12y ago
All the things you listed are perfectly reasonable. But, in some regions, the government deliberately issues too few medallions. This means consumers pay higher prices, and all that money goes to well-connected people who managed to get the medallions. Those people don't actually drive the taxis, they just take the money. Better regulation, like what you describe, seems better than no regulation, but I'd be willing to accept no taxi regulation if it gets rid of the political cronyism and high prices that go with it.
- skosuri 12y ago
  I don't use Uber, but is it generally cheaper than taxis?
  - BrentOzar 12y ago
    > I don't use Uber, but is it generally cheaper than taxis? no, generally more expensive, but the product is way better. My girlfriend gets sick with exhaust vapors when typical cheap taxi drivers lave their windows open and insist their AC is broken. Taxi shocks are usually shot, and the ride crashes around on city streets. Uber has nice, comfy, clean, big, air conditioned vehicles. Worth the extra money.
    - silencio 12y ago
      I started to get sick on one of my last Uber rides because the driver had on an absurd amount of cologne. Another had no clue what he was doing and explicitly took the street he was told not to take, getting stuck in the traffic I was hoping to avoid. Some of them are really reckless about driving too, sometimes ignoring posted signs altogether, and I think the only saving grace is that the cars are usually brand new. I could go on about how much I have a problem with Uber, just like how much I hate taxis. The only nice thing about Uber here is that there's an easy way to get in touch and fix a problem. That for sure, I agree, is worth the cost. That being said, I've found UberX in SF is cheaper than cabs, so I have even less interest in taking cabs.... but the last few cities I went to like NYC and Miami, the cabs were great. Wish SFMTA would step it up...

nostromo 12y ago

Imagine if driver's licenses were treated the same way cities treat taxi licenses and liquor licenses. The number available is limited, so if you want a driver's license you have to wait for someone to die, and then buy the license from the estate. Since it's artificially scarce you'd have to pay a pretty penny to get one. Some companies might step in and buy up driver's licenses to rent them to drivers for only a few hundred dollars a month... Treating any form of license as transferable private property seems to be against the public interest.

deleted 12y ago
[deleted]
Shivetya 12y ago
rent stabilization seems to fit that bill.
- michaelochurch 12y ago
  New York's rent stabilization isn't that bad, but it also doesn't have a major effect on rents, either for those who have it or those who don't. (Rent-stabilized apartments can go up by a few percent per year.) It's the 1947-era legacy rent control that is patently ridiculous. Most people underestimate the harm of that program because they don't understand price elasticity. It's true that only ~1-2% of apartments are under that system. However, 1-2% supply destruction can actually double prices. (See: oil shocks.) Another problem is that this country is run by scumbags and pussies who allow foreigners to own real estate (many countries don't). Now, I'm all for a reasonably open immigration policy, and letting foreigners live here is not the issue. (The people who move here to live here don't have a major effect on the rent, and are good for the country overall.) But the types of foreigners who buy U.S. real estate are usually corrupt officials who want a place to live if their own country brings them to trial. (In China, corruption is a death-penalty offense.) This is the real reason why Silicon Valley is so expensive: every fucking Communist Party scumbag in China and murdering Russian oligarch and Arab slave state billionaire has bought a place (even if it goes uninhabited) in California. It doesn't affect a large number of houses, strictly speaking, but it's enough of a margin to have massive impacts on the price level. I am amazed at Americans' willingness to be "patriotic" about stupid things and get into nonsensical wars... but then we go and let corrupt, murdering dictators and billionaires from all over the world buy California and Manhattan real estate. It's fucking disgusting.

refurb 12y ago

Anyone else find the graph of medallion values a little weird? Looking at the DJIA, It was ~11,700 in Jan 2000 and by March 2009 it was down to ~6,600. The graph makes it look like it was about 100% of what it was in 2000. That makes no sense. Also, they have the CPI plotted, but it's a straight line at 100. So they might be correcting for CPI, but in that case, you'd expect the 2009 DJIA to be even lower.

CamperBob2 12y ago

From the article: In February, he sued the city on behalf of medallion owners, brokers, managers, financiers and cab affiliations. The suit argues that the city has violated their rights by allowing new companies to provide an essentially identical transportation service without complying with existing regulation. By eliminating the exclusive right of medallion owners to provide that service, the suit argues, the city has taken away the thing that gives medallions their value as property under Illinois law. “If you think it’s an improvement to change the rules, maybe you can do that,” says Edward Feldman, a partner with Shakman. “But you have to provide compensation for the property rights you’re destroying. And that’s the Constitution.” Medallions represent a promise, he says. And on that promise, medallion owners took out mortgage-size loans. If the city backs out of that promise, it must make them whole. So, if I buy a fishing license but fail to catch any fish, can I sue my state's Department of Fish and Wildlife for a refund of my $50? I wonder what people would say if I tried?

7Figures2Commas 12y ago
That's an invalid analogy. A valid analogy would be that you purchased a fishing license from your state's Department of Fish and Wildlife because you were told one was legally required to fish in a certain location, but the Department of Fish and Wildlife then failed to take action against others who began fishing in that same location without a license. Good idea or horrible idea, certain cities created licensing regimes that promised to protect taxi drivers from competition if they paid for medallions. Now that others are flouting the law and circumventing the licensing regime, the taxi drivers want their protection money back if they're not going to receive the protection they were promised.
- xmodem 12y ago
  In terms of individual taxi drivers who took out massive loans this is a valid argument. In terms of the rent-seeking institutional investors who lobbied the government to create an asset class which diverts most of the profits away from the people actually doing the work and makes taxis more expensive for no return in public benefit. I have no issue with government regulation of the taxi industry - quite the opposite. Certainly I think that it's important to mandate vehicle safety inspections. But if taxi licenses are going to be supply constrained, they should be issued by the government for a flat fee on a first-come first-served, use-it-or-lose-it basis. They should only be purchasable by the driver that will be driving the taxi and they should not be transferrable.

MarkMc 12y ago

Why don't cities issue taxi licences for 1 or 3 years, instead of permanent medallions?