5 ms·

Philadelphia taxi medallions fetch less than 17% of asking price

41 points by davidf18 11y ago

alexnewman 11y ago
gasp the market is working
- bandrami 11y ago
  Yep. But medallions themselves are a deliberate market distortion. And I'm not a Milton Friedman "market distortions are always bad" person, but this distortion is definitely bad. Artificial scarcity is a stupid way to achieve whatever goal you have. Set regulatory standards. Set them as high as you want. But then let anyone who meets them participate in the regulated activity.
  - afsina 11y ago
    Regulations for carrying a passenger in a Taxi is also exaggerated. Apart from being able to drive, not much should be regulated IMO. Perhaps price and extra services can be apparent before entering the vehicle (if car has insurance etc..). And let the customer decide the rest.
    - Mikeb85 11y ago
      > Apart from being able to drive, not much should be regulated IMO. Travel to a number of developing countries where there aren't taxi regulations and say that... In the developed world, a marked taxi carries with it a guarantee of a consistent price, and a certain level of safety.
      - bandrami 11y ago
        OK, but I split time among India, Bangladesh, and Sri Lanka. Sri Lankan rickshaws are actually pretty reliable and safe. India's are less so. Bangladesh's are an absolute crapshoot. But my point is all three of these countries have (by US standards) insanely restrictive regulations; the problem is none of it is designed to improve the consumer experience; it's all designed to reward incumbent medallion holders.
        Mikeb85 11y ago
        I agree about the medallions, but there's much to be said for regulations. In my wife's country, taxis are basically a no-go, especially if you're white. Minibuses were OK in the day, otherwise you have to get a private driver, preferably one whom you know personally (so that if you're murdered or robbed there's a way to enact revenge). And just when I thought they were being paranoid, we did witness a robbery and subsequent shootout when we were there, one of her friends did get car-jacked and robbed, and shortly after we left one of the people whom we visited was gunned down and murdered by bandits. Lawless countries are less fun than they appear...
    - CaptainZapp 11y ago
      Actually I'm very, very much in favor of regulations, which support my safety. An excellent example are minimum rest requirements. You're strictly not allowed to moonlight as a cabby after a strenuous 10 hour shift. No such restrictions exist for "private" taxis. You may like to gamble with your safety, I sure as hell don't. There are exactly such regulations, which keep the public safe.
      - philjohn 11y ago
        Having had a friend seriously injured in a licensed minicab accident many years ago, I concur.
  - deleted 11y ago
    [deleted]
  - maudineormsby 11y ago
    I agree with this and your other comment and would add that the distortion of the market caused by medallions is exactly why the market is crashing as hard as it is, and also why Uber and Lyft are so popular - there's pent up demand for transportation via on demand cars that isn't able to be met under the taxi medallion system. Not just demand for more transportation but more cost effective and available transportation as well.
  - joncrocks 11y ago
    The other argument is one of shared resource. 'The roads' in a city can only 'support' a certain level of traffic/automobiles. Allowing the market select for how many taxis it can support could have unintended consequences for other industries/anything that makes shared use of the same limited resource.
    - sveiss 11y ago
      The shared resource argument is a good one, but why are only taxis limited? There are other approaches (for example, congestion charging as used in London) which can be more closely tailored to whatever outcome the regulator is trying to improve, be it reducing overall traffic volumes, reducing pollution, or restricting certain kinds of traffic at certain times of day. A congestion charge scheme akin to London would be a better approach, as it can be more easily tweaked for whatever goals you're trying to achieve (overall reduction in traffic, prioritizing environmentally-friendly vehicles, keeping goods vehicles out of the city during rush out, etc).
      - CaptainZapp 11y ago
        Other European cities, a good example being Zurich, limit the number of available public parking spaces. If you may have a potentially hard time to find relatively expensive parking this could be a big incentive to bike, or use (excellent) public transport. I'd be all for a congestion charge, but politically this is probably a non-starter.
    - InclinedPlane 11y ago
      This would apply to traditional cabs but not to internet dispatched ride services. There's no need for Uber drivers to circulate around the downtown is a city waiting to be hailed. Indeed, if anything Iber/Lyft should vastly cut down on the traffic impact of taxi services
DrStalker 11y ago
I have trouble finding sympathy for someone who over-leveraged to buy a billion dollars worth of taxi medallions on the assumption they would only ever go up in value.
bandrami 11y ago
Taxi medallions are the biggest cartel racket out there, and they're inordinately powerful in city politics. You want to regulate taxis? Great. I'm a liberal. I love that. Regulate the everloving #$%& out of them. Require absurd safety and environmental features. And then let the market decide how many taxi cabs the city can support. Even a bleeding heart leftist like me will say there are things the market is really, really good at, and deciding how many service providers a sector should have is absolutely one of them. Set standards -- set them high, for that matter -- but for God's sake let anyone who meets them participate in the market. Otherwise you're just a protection racket.
- jahewson 11y ago
  I'm with you on the cartel bit but I think you're confused about what racketeering is.
  - bandrami 11y ago
    That was hyperbole; it's not racketeering in the legal sense, since it's based on lobbying to change laws. Fair point.
- lazyant 11y ago
  This is my philosophy for many things ("regulate and let them be") including prostitution for example. Driving a cab shouldn't be different than having a company that uses forklifts; if you got the required licences you are good to go, there's no artificial fixed number of forklifts allowed in a city. For the regulatory part I'm called a leftist in the US and for the free market part I'm called right wing in Europe (where taxi drivers go on strike so they don't increment the licences and let more people work but for less overall money for all), go figure.
afsina 11y ago
Taxi medallion owners can cry me a river. Hell, whole idea of holly "yellow taxi" concept can go to drain. Here in Turkey, especially in İstanbul, taxis and private mini-bus transportation business is a big racket as well. Taxis are over priced and medallion (here they call it "plate") prices are extremely high. Taxi drivers are not the owners and they must pay a big sum of what they earn to medallion owners daily basis (A single taxi can bring $5-10k revenue a month to medallion owner in a busy district). As expected, this created illegal taxi business and taxi unions are trying to destroy them. Mini-bus racket forbids nice inter-city buses carrying passengers to mid-length distances so that people are forced to take their shitty over crowded mini buses. We need high tech, easily taxed, easy entrance taxi business here badly.
InclinedPlane 11y ago
The internet's main power is in disintermediation, and in that regard it is an incredibly potent force. At this point it's not an adequate excuse to say you didn't notice or didn't understand what was happening, the internet is in a billion pockets across the world, maybe more, and there's no shortage of examples of industries that have been disrupted by it. Doubling down on the old ways, especially when they have been propped up through corruption or regulatory capture will gain you no pity from me. Adapt and move on, if you can't compete, good riddance.
epc 11y ago
This is a poorly written article. If Philadelphia truly needs more cabs, then Uber can't be blamed for the collapse in medallion prices since it's clearly NOT filling a market need. In New York City, where the medallion owners are demanding some sort of bailout from City taxpayers, all Uber drivers are regulated under the existing TLC system. I'm no fan of Uber, but they've operated and grown in NYC within existing restrictions. Tried to comment on the article itself but their goofy Facebook bound commenting system failed with any of the accounts I tried to use.
- vijayr 11y ago
  I can't understand this bailout thing at all. If my job gets outsourced or if I get replaced by a computer/robot, do I get a "bailout"? Why is it that industries who were monopolies for so long, who had decades upon decades to innovate but didn't, feel entitled to help from taxpayers? Not all bailouts are bad of course, but this is ridiculous, isn't it? EDIT: New York City, for example, auctioned 368 medallions between November 2013 and February 2014. Trading for around $1.2 million each, that injected almost half a billion dollars into the city’s coffers. Jeez! Half a billion for driving taxis!
- cbr 11y ago
  > If Philadelphia truly needs more cabs, then Uber can't be > blamed for the collapse in medallion prices since it's > clearly NOT filling a market need. A medallion has traditionally been a long-term asset. The city sells it to you, and it's yours to keep and use, or sell along to someone else. With Uber/Lyft getting around the medallions by avoiding the need for literal street hailing, the long term prospects for medallions are much reduced. Even if we need more cabs right now, buyers may not be seeing much of a future in the market.
dec0dedab0de 11y ago
The cover article in the Philadelphia City Paper this week was about Uber. I didn't read it to see what opinions were being handed out, but I wonder if someone on either side of this is paying a PR firm.
Jgrubb 11y ago
> The Observer already wrote about New York City’s biggest medallion owner, Evgeny “Gene” Freidman, and his efforts to secure some sort of bailout as he watched the value of his 900-plus medallions shrivel. Those efforts have found surprising receptiveness in a city that has made a point of terrorizing billionaires. I think you meant "made a point of bailing out billionaires".
al2o3cr 11y ago
"Those efforts have found surprising receptiveness in a city that has made a point of terrorizing billionaires." Wait, did they start killing them without a trial just for walking down the street? This surely can't be describing saying mean things about billionaires as "terrorizing".
brazzy 11y ago
> ...those individuals who have invested for decades in yellow medallions. So I believe it is important that we see the devaluation of the medallions as a crisis. [...] I believe we have to step up and help those individuals ... to give value to those medallions. WTF? That's the most blatant public admission of being in the pocket of moneyed interests that I've ever heard from a politician. It's as if Ydanis Rodriguez has never even realized that having value as an investment was never the intended purpose of taxi medallions.
davidf18 11y ago
Even UberX rates in NYC are ridiculous: Philadelphia: $1.25 base fare 0.18 / min + $1.25 / mile Chicago: $1.70 0.20 / min + $0.90 / mile NYC: $3.00 0.40 / min + $2.15 / mile https://www.uber.com/cities/philadelphia https://www.uber.com/cities/philadelphia https://www.uber.com/cities/chicago https://www.uber.com/cities/chicago https://www.uber.com/cities/new-york https://www.uber.com/cities/new-york
ck425 11y ago
The one complaint I can understand from authorities is that many app drivers don't have adequate insurance. I think there's a legitimate worry that if an accident happens while drivers are working their insurance won't cover it. Beyond that I agree the whole medallion idea is out of date.

41 points by davidf18 11y ago

alexnewman 11y ago

gasp the market is working

bandrami 11y ago
Yep. But medallions themselves are a deliberate market distortion. And I'm not a Milton Friedman "market distortions are always bad" person, but this distortion is definitely bad. Artificial scarcity is a stupid way to achieve whatever goal you have. Set regulatory standards. Set them as high as you want. But then let anyone who meets them participate in the regulated activity.
- afsina 11y ago
  Regulations for carrying a passenger in a Taxi is also exaggerated. Apart from being able to drive, not much should be regulated IMO. Perhaps price and extra services can be apparent before entering the vehicle (if car has insurance etc..). And let the customer decide the rest.
  - Mikeb85 11y ago
    > Apart from being able to drive, not much should be regulated IMO. Travel to a number of developing countries where there aren't taxi regulations and say that... In the developed world, a marked taxi carries with it a guarantee of a consistent price, and a certain level of safety.
    - bandrami 11y ago
      OK, but I split time among India, Bangladesh, and Sri Lanka. Sri Lankan rickshaws are actually pretty reliable and safe. India's are less so. Bangladesh's are an absolute crapshoot. But my point is all three of these countries have (by US standards) insanely restrictive regulations; the problem is none of it is designed to improve the consumer experience; it's all designed to reward incumbent medallion holders.
      - Mikeb85 11y ago
        I agree about the medallions, but there's much to be said for regulations. In my wife's country, taxis are basically a no-go, especially if you're white. Minibuses were OK in the day, otherwise you have to get a private driver, preferably one whom you know personally (so that if you're murdered or robbed there's a way to enact revenge). And just when I thought they were being paranoid, we did witness a robbery and subsequent shootout when we were there, one of her friends did get car-jacked and robbed, and shortly after we left one of the people whom we visited was gunned down and murdered by bandits. Lawless countries are less fun than they appear...
  - CaptainZapp 11y ago
    Actually I'm very, very much in favor of regulations, which support my safety. An excellent example are minimum rest requirements. You're strictly not allowed to moonlight as a cabby after a strenuous 10 hour shift. No such restrictions exist for "private" taxis. You may like to gamble with your safety, I sure as hell don't. There are exactly such regulations, which keep the public safe.
    - philjohn 11y ago
      Having had a friend seriously injured in a licensed minicab accident many years ago, I concur.
- deleted 11y ago
  [deleted]
- maudineormsby 11y ago
  I agree with this and your other comment and would add that the distortion of the market caused by medallions is exactly why the market is crashing as hard as it is, and also why Uber and Lyft are so popular - there's pent up demand for transportation via on demand cars that isn't able to be met under the taxi medallion system. Not just demand for more transportation but more cost effective and available transportation as well.
- joncrocks 11y ago
  The other argument is one of shared resource. 'The roads' in a city can only 'support' a certain level of traffic/automobiles. Allowing the market select for how many taxis it can support could have unintended consequences for other industries/anything that makes shared use of the same limited resource.
  - sveiss 11y ago
    The shared resource argument is a good one, but why are only taxis limited? There are other approaches (for example, congestion charging as used in London) which can be more closely tailored to whatever outcome the regulator is trying to improve, be it reducing overall traffic volumes, reducing pollution, or restricting certain kinds of traffic at certain times of day. A congestion charge scheme akin to London would be a better approach, as it can be more easily tweaked for whatever goals you're trying to achieve (overall reduction in traffic, prioritizing environmentally-friendly vehicles, keeping goods vehicles out of the city during rush out, etc).
    - CaptainZapp 11y ago
      Other European cities, a good example being Zurich, limit the number of available public parking spaces. If you may have a potentially hard time to find relatively expensive parking this could be a big incentive to bike, or use (excellent) public transport. I'd be all for a congestion charge, but politically this is probably a non-starter.
  - InclinedPlane 11y ago
    This would apply to traditional cabs but not to internet dispatched ride services. There's no need for Uber drivers to circulate around the downtown is a city waiting to be hailed. Indeed, if anything Iber/Lyft should vastly cut down on the traffic impact of taxi services

DrStalker 11y ago

I have trouble finding sympathy for someone who over-leveraged to buy a billion dollars worth of taxi medallions on the assumption they would only ever go up in value.

bandrami 11y ago

Taxi medallions are the biggest cartel racket out there, and they're inordinately powerful in city politics. You want to regulate taxis? Great. I'm a liberal. I love that. Regulate the everloving #$%& out of them. Require absurd safety and environmental features. And then let the market decide how many taxi cabs the city can support. Even a bleeding heart leftist like me will say there are things the market is really, really good at, and deciding how many service providers a sector should have is absolutely one of them. Set standards -- set them high, for that matter -- but for God's sake let anyone who meets them participate in the market. Otherwise you're just a protection racket.

jahewson 11y ago
I'm with you on the cartel bit but I think you're confused about what racketeering is.
- bandrami 11y ago
  That was hyperbole; it's not racketeering in the legal sense, since it's based on lobbying to change laws. Fair point.
lazyant 11y ago
This is my philosophy for many things ("regulate and let them be") including prostitution for example. Driving a cab shouldn't be different than having a company that uses forklifts; if you got the required licences you are good to go, there's no artificial fixed number of forklifts allowed in a city. For the regulatory part I'm called a leftist in the US and for the free market part I'm called right wing in Europe (where taxi drivers go on strike so they don't increment the licences and let more people work but for less overall money for all), go figure.

afsina 11y ago

Taxi medallion owners can cry me a river. Hell, whole idea of holly "yellow taxi" concept can go to drain. Here in Turkey, especially in İstanbul, taxis and private mini-bus transportation business is a big racket as well. Taxis are over priced and medallion (here they call it "plate") prices are extremely high. Taxi drivers are not the owners and they must pay a big sum of what they earn to medallion owners daily basis (A single taxi can bring $5-10k revenue a month to medallion owner in a busy district). As expected, this created illegal taxi business and taxi unions are trying to destroy them. Mini-bus racket forbids nice inter-city buses carrying passengers to mid-length distances so that people are forced to take their shitty over crowded mini buses. We need high tech, easily taxed, easy entrance taxi business here badly.

InclinedPlane 11y ago

The internet's main power is in disintermediation, and in that regard it is an incredibly potent force. At this point it's not an adequate excuse to say you didn't notice or didn't understand what was happening, the internet is in a billion pockets across the world, maybe more, and there's no shortage of examples of industries that have been disrupted by it. Doubling down on the old ways, especially when they have been propped up through corruption or regulatory capture will gain you no pity from me. Adapt and move on, if you can't compete, good riddance.

epc 11y ago

This is a poorly written article. If Philadelphia truly needs more cabs, then Uber can't be blamed for the collapse in medallion prices since it's clearly NOT filling a market need. In New York City, where the medallion owners are demanding some sort of bailout from City taxpayers, all Uber drivers are regulated under the existing TLC system. I'm no fan of Uber, but they've operated and grown in NYC within existing restrictions. Tried to comment on the article itself but their goofy Facebook bound commenting system failed with any of the accounts I tried to use.

vijayr 11y ago
I can't understand this bailout thing at all. If my job gets outsourced or if I get replaced by a computer/robot, do I get a "bailout"? Why is it that industries who were monopolies for so long, who had decades upon decades to innovate but didn't, feel entitled to help from taxpayers? Not all bailouts are bad of course, but this is ridiculous, isn't it? EDIT: New York City, for example, auctioned 368 medallions between November 2013 and February 2014. Trading for around $1.2 million each, that injected almost half a billion dollars into the city’s coffers. Jeez! Half a billion for driving taxis!
cbr 11y ago
> If Philadelphia truly needs more cabs, then Uber can't be > blamed for the collapse in medallion prices since it's > clearly NOT filling a market need. A medallion has traditionally been a long-term asset. The city sells it to you, and it's yours to keep and use, or sell along to someone else. With Uber/Lyft getting around the medallions by avoiding the need for literal street hailing, the long term prospects for medallions are much reduced. Even if we need more cabs right now, buyers may not be seeing much of a future in the market.

dec0dedab0de 11y ago

The cover article in the Philadelphia City Paper this week was about Uber. I didn't read it to see what opinions were being handed out, but I wonder if someone on either side of this is paying a PR firm.

Jgrubb 11y ago

> The Observer already wrote about New York City’s biggest medallion owner, Evgeny “Gene” Freidman, and his efforts to secure some sort of bailout as he watched the value of his 900-plus medallions shrivel. Those efforts have found surprising receptiveness in a city that has made a point of terrorizing billionaires. I think you meant "made a point of bailing out billionaires".

al2o3cr 11y ago

"Those efforts have found surprising receptiveness in a city that has made a point of terrorizing billionaires." Wait, did they start killing them without a trial just for walking down the street? This surely can't be describing saying mean things about billionaires as "terrorizing".

brazzy 11y ago

> ...those individuals who have invested for decades in yellow medallions. So I believe it is important that we see the devaluation of the medallions as a crisis. [...] I believe we have to step up and help those individuals ... to give value to those medallions. WTF? That's the most blatant public admission of being in the pocket of moneyed interests that I've ever heard from a politician. It's as if Ydanis Rodriguez has never even realized that having value as an investment was never the intended purpose of taxi medallions.

davidf18 11y ago

Even UberX rates in NYC are ridiculous: Philadelphia: $1.25 base fare 0.18 / min + $1.25 / mile Chicago: $1.70 0.20 / min + $0.90 / mile NYC: $3.00 0.40 / min + $2.15 / mile https://www.uber.com/cities/philadelphia https://www.uber.com/cities/philadelphia https://www.uber.com/cities/chicago https://www.uber.com/cities/chicago https://www.uber.com/cities/new-york https://www.uber.com/cities/new-york

ck425 11y ago

The one complaint I can understand from authorities is that many app drivers don't have adequate insurance. I think there's a legitimate worry that if an accident happens while drivers are working their insurance won't cover it. Beyond that I agree the whole medallion idea is out of date.