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The Tyranny of Taxi Medallions

blog.priceonomics.com

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Re: The Tyranny of Taxi Medallions

#131

Post by jonnathanson »

pg wrote: post #2

Structurally this practice is a lot like the preindustrial precursor of taxation, when governments would sell monopolies on the import or production of things in exchange for a lump sum. When obsolete government practices persist, they tend to be pretty sinister.

See also: liquor licenses, various types of zoning permits, etc.

In certain states and cities with especially draconian licensing systems and quotas, the aftermarkets for permits and licenses tend to get ridiculous. Not quite as ridiculous as taxi medallions, but pretty ridiculous nonetheless. (Liquor licenses in certain parts of California have broken the $200,000 mark at auction, for instance).

Re: The Tyranny of Taxi Medallions

#132

Post by chaz »

JackFr wrote: post #53
chaz wrote: post #42

Earlier quoted context omitted.

Regardless of origins, I think there's still an important role for city governments to manage the number of cars on the street. NPR Planet Money did a story about the effect of NYC's planned +2,000 cabs (in additional to the existing 13,200) will have on the city: shorter wait times, but longer drive times for everyone. If the story is correct, more deregulation with more cars on the street without other measures (su…

It's far from obvious that demand has outstripped supply. The population of Manhattan was significantly higher in 1937 than it is now 1.9 million vs. 1.6 million. On a population basis it would seem that we would need fewer rather than more cabs. What drives the demand for cabs is the the price of a ride versus the alternative. If the regulated fare is low relative to subways & buses and the overall price level, cabs…

Are you suggesting that there will be not be an increase in the number of cabs in NYC if more medallions are opened up?

Re: The Tyranny of Taxi Medallions

#133

Post by argumentum »

jbooth wrote: post #129
argumentum wrote: post #96

Earlier quoted context omitted.

I'm comparing the logic , not the gravity of the situations. You had pointed out (rightly) that purchasing and holding medallions is legal, and those who bought them did so with the understanding that they would profit. At the same time, they must have observed that the very existence of the medallion system limited the freedom of others. Some might have even genuinely viewed this as altruistic. All that was true of…

Driving taxis isn't a crime against humanity. Your argument is that requiring medallions to drive a taxi (which I agree has become an inefficient and slightly corrupt situation) is in any way comparable to slavery is an insult to anybody who's ever read any history.

> Driving taxis isn't a crime against humanity

The problem here isn't some people "driving taxis", its that these people, and organizations associated with them, lobbied for and bought into a system that prevents, by force of government, anyone else from driving taxis.

And of course, even that is not a crime against humanity. If it was, I'd be advocating the use of military intervention if it was serious enough, such as in the case of mass slavery or genocide. All I'm saying is that if/when we get rid of this system, we don't need to compensate medallion owners.

Re: The Tyranny of Taxi Medallions

#134

Post by mindcrime »

andylei wrote: post #92
mindcrime wrote: post #38

Earlier quoted context omitted.

Sounds like a reason to stop regulating taxis to me. If some sort of independent "certification" is needed, there's no reason the free market can't provide such a service. In fact, it such a service is actually valuable, it's almost inevitable that it would emerge.

> there's no reason the free market can't provide such a service sure there is. here's a bunch of reasons: http://en.wikipedia.org/wiki/Market_failure

Let me rephrase that, then:

> there's no particular reason the free market can't provide such a service, but there's no guarantee that it will.

Still, I stand by my assertion that, in general, if such a service is legitimately valued and necessary, a provider will emerge. No, a free market does not guarantee an optimal outcome for every individual, not does it guarantee that well get what we wish for. But free markets are still generally better than non-free ones. Pointing out that there are pathologies in full fledged laissez-faire doesn't count for much, unless one contends - and can prove - that (one or more of) the other options has no pathologies of it's own.

Re: The Tyranny of Taxi Medallions

#135

Post by lukeschlather »

brc wrote: post #127
seanalltogether wrote: post #49

Earlier quoted context omitted.

I've brought this up in another thread, but over in the UK, due to a lack of property taxes, its possible to purchase a home, yet stil have to pay a yearly ground rent to a private party. The cost to own land in nothing, so there's little incentive to ever sell it, and instead lease it out. People may complain about property taxes in the USA, but it prevents this very practice from happening. It would be better for e…

In practice, though, it's not that different to property taxes, just that the land is owned by some lord instead of the central government. The effect is just the same. Nobody really owns their land, whether leasehold or freehold. Ownership is really just a right to exclusive use in the best case. As the old saying goes, if you want to know who really owns your land, stop paying taxes and find out.

The cornerstone of democratic philosophy is that there's a huge difference between a central democratic government and some lord.

Re: The Tyranny of Taxi Medallions

#136

Post by jcampbell1 »

jonnathanson wrote: post #131
pg wrote: post #2

Structurally this practice is a lot like the preindustrial precursor of taxation, when governments would sell monopolies on the import or production of things in exchange for a lump sum. When obsolete government practices persist, they tend to be pretty sinister.

See also: liquor licenses, various types of zoning permits, etc. In certain states and cities with especially draconian licensing systems and quotas, the aftermarkets for permits and licenses tend to get ridiculous. Not quite as ridiculous as taxi medallions, but pretty ridiculous nonetheless. (Liquor licenses in certain parts of California have broken the $200,000 mark at auction, for instance).

In healthcare many states require "Certificates of Need", before building any healthcare facilities or even buying equipment. I think it is cost control by granting monopolies. If you eliminate competition, the providers will be able to operate more efficiently and lower costs... I kid you not, this is the explanation.

Re: The Tyranny of Taxi Medallions

#137

Post by oijaf888 »

JackFr wrote: post #107
gwern wrote: post #76

Earlier quoted context omitted.

> It's far from obvious that demand has outstripped supply. The population of Manhattan was significantly higher in 1937 than it is now 1.9 million vs. 1.6 million. On a population basis it would seem that we would need fewer rather than more cabs. Wrong population number, in the case of Manhattan where real estate prices are so high that 'number of people officially living there' becomes the wrong metric, and the ri…

You miss the point -- it's not about the number -- it's about the change since 1937. No where in the reference you provide is there any evidence that this number has grown since 1937. http://www.nypost.com/p/news/local/subways_on_roll_fDYxgwu92... From the Apr 10th NY Post: "More than 1.65 billion straphangers used the system in 2012 — numbers that haven’t been seen since 1946 when ridership was more than 2 billion,…

Has the relative income of the residents changed since then? I.e. if the average income in 1937 was on par with the national average and now its 200x that, perhaps there's greater demand for a luxury service such as cabs from a greater slice of the population.

Re: The Tyranny of Taxi Medallions

#138

Post by stormbrew »

larrys wrote: post #59
pg wrote: post #2

Structurally this practice is a lot like the preindustrial precursor of taxation, when governments would sell monopolies on the import or production of things in exchange for a lump sum. When obsolete government practices persist, they tend to be pretty sinister.

"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?)

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.

Re: The Tyranny of Taxi Medallions

#139

Post by stormbrew »

codex wrote: post #109
jstanley wrote: post #99

Earlier quoted context omitted.

"they prevent a tragedy of the commons from creating gridlock and pollution in major cities by limiting the number of cars circling around doing nothing on city streets." Why would a free market not prevent this? if there are excess taxis, taxi-driving is not profitable. If taxi-driving is profitable and there is still gridlock, that is a different problem. Avoiding gridlock by creating an artificial shortage of tran…

Simple: the number of cabs at which taxi driving is no longer profitable is far, far more than the optimal number of cabs. The optimal number of cabs balances cab availability with traffic such that the time taken to go from point A to point B is minimal. This takes into account the time it takes to hail the cab (waiting around if there is none) and the time it takes for the cab to fight though traffic to point B. An…

> Simple: the number of cabs at which taxi driving is no longer profitable is far, far more than the optimal number of cabs.

Do you have any evidence of this claim? As with anything, there isn't some magical shut-off point where everyone is selling something and then no one is after the price increases another dollar.

Your analysis strikes me as too simplistic. It ignores opportunity costs and the possibility that it might decrease personal car ownership outright if a viable taxi system were to exist.

At any rate, even if it's taken as fact it doesn't justify a fixed number of medallions revised once every few decades. A price set on them, adjusted regularly, would achieve the same cause and be less limiting and more responsive to growth (something cities tend to do a lot of between the issuance of new medallions).

Creating artificial scarcity does nothing but enable some people to profit with little risk.

Re: The Tyranny of Taxi Medallions

#140

Post by pg »

codex wrote: post #87

Medallions exist for a very good reason: they prevent a tragedy of the commons from creating gridlock and pollution in major cities by limiting the number of cars circling around doing nothing on city streets. Most of the time, cabs just drive around waiting for a fare. This is because cabs are often hailed when they are seen, but even if a cab is summoned by a phone call (or smartphone) the closet cab to the fare is…

While that may be a benefit of medallions (or not), it's almost certainly not, historically, why they exist.
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