Chicago taxi industry sliding towards collapse • Hacker News Board

Re: Chicago taxi industry sliding towards collapse

#211

Post by WCityMike » Sat, Jun 10, 2017, 5:53 PM UTC

GnarfGnarf wrote: post #176

basseq wrote: post #3

I'm left wondering... so what? The "personal transportation" market has massively changed. Whether it's for the better or worse simply doesn't matter . Veteran Chicago cabbie John Aikins,67, who is facing foreclosure on two medallions for which he owes more than $330,0000, said he has little hope that the industry can be saved. "It feels like the city is just watching us collapse," Aikins said. "Right now, there are…

I take your point. However there is one case where traditional cab companies provide a benefit. When a city issues permits for the lucrative airport business to one specific cab company, it is with the understanding that there will be cars waiting for passengers around the clock, even during unprofitable times of the day. If the cab business becomes a free-for-all, there will be no one waiting at the airport at 3:00…

At least in Chicago, public transit options exist.

Re: Chicago taxi industry sliding towards collapse

#212

Post by xigency » Sat, Jun 10, 2017, 5:56 PM UTC

stevekemp wrote: post #203

smileysteve wrote: post #197

Earlier quoted context omitted.

Taxi service and rental cars are a poor substitute for public transit. I love that I live in one of the few cities with a train that leaves directly from the airport.

Manchester, UK? Helsinki, Finland? Tokyo, Japan? (I now wonder how many others I don't know about from personal experience!)

Chicago

Re: Chicago taxi industry sliding towards collapse

#213

Post by didibus » Sat, Jun 10, 2017, 5:57 PM UTC

ams6110 wrote: post #127

wutbrodo wrote: post #98

Earlier quoted context omitted.

TL;DR: In an economy with government involvement as heavy as ours[1], it's ludicrous to claim that people should not only know the "true" value of something but know precisely when the gov't is going to decide that the market value should be allowed to revert to its "true" value. > Taxi drivers did not get screwed. It's medallion owners that got screwed Right, good catch, I wasn't thinking about that fact. That's not…

What is the "true" value of a taxi medallion, in a regulatory context where the government is setting the supply? You can compute the present value of the total profit you can expect to earn (average fares less expenses including the medallion) and if it's less than what the medallion costs, the medallion is overpriced.

I don't think it was though. A medallion would make you around 50k in profit a year. Medallion's were a great investment, but the greatnest of them depended 100% on the government regulations staying relatively the same.

Re: Chicago taxi industry sliding towards collapse

#214

Post by xigency » Sat, Jun 10, 2017, 5:58 PM UTC

PacketPaul wrote: post #179

clock_tower wrote: post #146

Earlier quoted context omitted.

The problem is that Uber loses money on every ride, so they'll have to raise their rates as soon as they stop being subsidized by VCs -- unless they have self-driving taxis by then.

How are they losing money on each ride? They are not managing fleets of cars, employees, etc. It's an app.

That is exactly the question you should be asking, thank you.

Answer is they provide great rates for passengers - see all of the anecdotal evidence here - and great pay for drivers.

It literally is "too good to be true."

It's just an app--with a $20B valuation and about as much in free cash.

Re: Chicago taxi industry sliding towards collapse

#215

Post by wand3r » Sat, Jun 10, 2017, 6:01 PM UTC

GnarfGnarf wrote: post #176

basseq wrote: post #3

I'm left wondering... so what? The "personal transportation" market has massively changed. Whether it's for the better or worse simply doesn't matter . Veteran Chicago cabbie John Aikins,67, who is facing foreclosure on two medallions for which he owes more than $330,0000, said he has little hope that the industry can be saved. "It feels like the city is just watching us collapse," Aikins said. "Right now, there are…

I take your point. However there is one case where traditional cab companies provide a benefit. When a city issues permits for the lucrative airport business to one specific cab company, it is with the understanding that there will be cars waiting for passengers around the clock, even during unprofitable times of the day. If the cab business becomes a free-for-all, there will be no one waiting at the airport at 3:00…

So the "benefit" was instead of allowing people to notify them in advance; the daytime market subsidized cars waiting mostly idle at 3am.

Re: Chicago taxi industry sliding towards collapse

#216

Post by didibus » Sat, Jun 10, 2017, 6:06 PM UTC

I highly recommend people read this 2011 reuters article: http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me...

Given the regulations, Medallions would make you 50k profit a year.

You could suspect a bubble, but the math holds up. Though that profit calculation is dependent on the fare regulations and limits on medallions.

Re: Chicago taxi industry sliding towards collapse

#217

Post by valuearb » Sat, Jun 10, 2017, 6:15 PM UTC

didibus wrote: post #216

I highly recommend people read this 2011 reuters article: http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me... Given the regulations, Medallions would make you 50k profit a year. You could suspect a bubble, but the math holds up. Though that profit calculation is dependent on the fare regulations and limits on medallions.

So awesome that the Monopoly Medallion holders are filing for bankruptcy.

Re: Chicago taxi industry sliding towards collapse

#218

Post by unethical_ban » Sat, Jun 10, 2017, 6:19 PM UTC

wizu wrote: post #128

djsumdog wrote: post #126

Earlier quoted context omitted.

That man took out a loan for a medallion, with the idea that he should be able to sell it once he retires. The medallion is now worthless. If Chicago cares about the cabbies, individual owners should be paid dollar for dollar the value of those medallions, even if no one else will buy them in the future. (Does Chicago buy back the medallions, or do you have to have to sell them to someone else? Is the 300,000 the mar…

> If Chicago cares about the cabbies That's the thing though, they don't. And why would they? These cabbies made a bet that the medallion would not lose value until they sold it, and they lost that bet. How is this different from any other small-time business going bankrupt?

Sure. Next thing, the Treasury immediately stops honoring $20 bills. Hey, what chumps we were, accepting cash!

The analogy holds: A city government had a system where a good had artificial scarcity and intrinsic value from stable government policy. Then, it suddenly changed. I'm all for ride-hailing changing our public transit dynamic, but I can't fault the players of the old system too much for saying "What the hell about my retirement, my end of life?"

Re: Chicago taxi industry sliding towards collapse

#219

Post by valuearb » Sat, Jun 10, 2017, 6:19 PM UTC

tstactplsignore wrote: post #9

basseq wrote: post #3

I'm left wondering... so what? The "personal transportation" market has massively changed. Whether it's for the better or worse simply doesn't matter . Veteran Chicago cabbie John Aikins,67, who is facing foreclosure on two medallions for which he owes more than $330,0000, said he has little hope that the industry can be saved. "It feels like the city is just watching us collapse," Aikins said. "Right now, there are…

>Whether it's for the better or worse simply doesn't matter Yikes- I have only a little sympathy for the taxi industry, but it is very scary that you do not believe we should be concerned with whether market forces improve society or not. I think it is extremely important to the vast majority of people that any enormous change in transportation occurs for the benefit of society - the ideology that capitalism is an en…

The market, i.e. customers, are saying they prefer Lyft and Uber to monopoly taxis.

Market forces are naturally driven by customer demand and the realities of supply costs. Government intervention/subsidies is the only thing that interferes with that process, and almost always that intervention is being driven by self interested actors looking to reap above market profits.

You may not like what customers want, but that doesn't mean it's not better for them.

Re: Chicago taxi industry sliding towards collapse

#220

Post by valuearb » Sat, Jun 10, 2017, 6:24 PM UTC

tjpd wrote: post #165

TulliusCicero wrote: post #47

Earlier quoted context omitted.

Yeah, and I bet after Borders shuts down, you'll see Amazon raise book prices sky-high! People always claim this will happen, and it never seems to. If Uber tripled prices, a competitor would start up to cut into their market share.

There are plenty of examples of individual companies (or groups of companies) getting too much monopolistic (or oligopolistic) power and doing just that or similar. You could look at at the Phoebus Cartel of lightbulb manufactures [1], the Bell System monopoly [2], or in transportation the GM Streetcar conspiracy [3]. Due to Uber's network effects you could say they'd have even greater power to change prices dramatic…

Phoebus couldn't last, no free market cartel can.

Bell System ended up being heavily regulated, and it's service was second to none. It was nearly a natural monopoly because of the cost of running phone lines. If Uber ever became that, we could resolve any problems with regulation.

But in reality Uber can never become a natural monopoly, entry into their market is too easy and just gets easier over time as costs decline for systems development/operation.

What will happen if they succeed is that Uber will become a valuable brand, people will prefer it, and other competitors will be forced to compete solely on price. So far brand building is something Uber is struggling with.