
Taxi medallions have been the best investment. Now Uber may be changing that - nthitz
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/20/taxi-medallions-have-been-the-best-investment-in-america-for-years-now-uber-may-be-changing-that/
======
nostromo
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.

~~~
imurray
Singapore has a quota system for vehicles. The cost of a 10-year vehicle
license under their auction system can exceed the value of the vehicle:
[https://en.wikipedia.org/wiki/Certificate_of_Entitlement](https://en.wikipedia.org/wiki/Certificate_of_Entitlement)

The situation isn't the same as your hypothetical situation though. The
licenses aren't perpetual or (for the most part) transferable.

Incidentally, the traffic flows pretty well there.

~~~
michaelochurch
Singapore is a different case, because it's such a small country. Between the
size of the island and the climate (hot/humid) they can't afford uncontrolled
growth of car usage. It's also a place (like Manhattan) where you don't need a
car.

Frankly, I think car usage should, ideally, cost 2-3 times what it costs in
the U.S. to account for all the externalized costs. (Those taxes could be used
to modernize the train system and public transportation.) That wouldn't be
practical, unfortunately, as the country is set up now.

~~~
hiharryhere
Public transport and trains don't do anything to help the many folks living
outside cities. Singapore is very different to downtown Texarkana.

Try telling bill the farmer that his truck is gonna cost 3x more to run this
year to help fund light rail in The city. Singapore and the US is an apples to
pork chops comparison.

~~~
xmodem
Australia has a system whereby "bill the farmer" (and miners) can claim a tax
credit for fuel excise taxes, whereas inner city drivers can't.

The UK has a system where inner city drivers have to pay congestion taxes.

Both of these systems make some progress towards limiting congestion and
subsidising public transport in dense areas without hurting those outside the
cities. Personally I think they should both go a lot further.

------
raverbashing
"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
> 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...](http://www.npr.org/blogs/money/2012/07/31/157477611/does-new-york-
city-need-more-taxis)

~~~
praxulus
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.

------
skosuri
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.

~~~
imroot
The biggest issue that I have with this is that the government regulations are
meaningless these days due to lack of code enforcement.

Two great examples: 1.) Staying in Fremont, CA, needing a trip to the San Jose
airport at 4:50 in the morning. I had a cab 'scheduled' but a few drivers
didn't show up, and they didn't bother calling me to let me know that they
were not going to show up. The dispatcher didn't speak english well and didn't
understand the questions that I asked. If I had instant feedback that nobody
was coming, I would have made alternate plans the minute that I knew nobody
was going to pick me up. 2.) In Chicago for a business trip. I generally don't
carry cash, but, needed a ride from point a to point b. Taxi driver's sticker
said he took credit cards, but his machine was 'down.' A "standoff" of sorts
occurred between me, the taxi driver, and Chicago PD; ultimately, after the
police harassing him (and reminding him that a working credit card reader was
required in the city), he reluctantly ran my credit card and let me out of his
car.

It's unfair that the Taxi companies skirt these rules too -- Uber and Lyft
just give their ecosystems a quicker way to get ride of bad actors and focus
on customer service, where the Taxi companies are focused on keeping the
medallion owners happy.

~~~
dkarapetyan
I've never had this issue. Every dispatcher has spoken very clearly and my cab
orders have arrived on or ahead of time every time. As for the credit card
issue that is easy enough to fix. I always give them a cash tip and then ask
them to put the actual travel charge on a credit card.

~~~
AJ007
Cities vary. There are good cab drivers, bad ones, and really bad ones. I've
had the same things happen to me as the previous poster: didn't show up,
claimed credit card didn't work (frequent.)

I have also had a few other things: kidnapped, cab driver trying to run other
cars off the road, talking on cell phone (40% - 60% of the time), stopping for
gas, picking up their friends, operate a vehicle with brakes that were clearly
barely operable, and so on.

Uber has bad drivers too, but I assume they don't last long. In NYC, at least,
cab drivers can expect to keep driving even after killing pedestrians.
[http://nypost.com/2014/02/09/cabbies-who-kill-or-maim-in-
nyc...](http://nypost.com/2014/02/09/cabbies-who-kill-or-maim-in-nyc-keep-
licenses-return-to-work/)

~~~
waps
This is what you'd expect government to do when taking away a licence would
mean the person loses their livelihood.

The same thing is true for lawyers, land meters, certified accountants, ...
they effectively get one "get out of jail free" card for any offence that
occurred on the job, and isn't an obvious repeat offence, or was an obvious
case of corruption (and getting paid a lot, but not directly to commit a crime
is not corruption).

Why ? Two reasons. Firstly, because taking that licence destroys the person,
nobody wants to do it. Second because of the effect of taking away licences,
their competitors could cause their licence to be taken away to increase
business (for lawyers at least, I know two cases where this happened)

------
vaadu
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
When driver-less cars come, Uber too will be redundant too. That's a while
away though.

~~~
hibikir
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
> 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.

------
crazy1van
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.

------
CamperBob2
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
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
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.

------
higherpurpose
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
Ugh, Stossel. Taxi deregulation has been done many times before. Try this:
[http://toomanytaxis.com/2009/01/taxi-deregulation-brings-
onl...](http://toomanytaxis.com/2009/01/taxi-deregulation-brings-only-regret/)

------
lukasm
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
Under 3, doesn't there still need to be a dispatch system?

------
hackaflocka
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.

------
refurb
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.

------
rahimnathwani
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
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
If you use your own car as a taxi, your depreciation, insurance and
maintenance costs would also be significant.

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

