Posted on 01/30/2017 12:25:21 PM PST by C19fan
NYC taxi medallions were going for a $1 MM a piece just a few years ago before the ride sharing apps came out.
Everyone thinks they are entitled to high returns without any risk.
Not quite a fair comment. Medallion holders, most of whom are long time hard working cab drivers (not wealthy folks) bought medallions when certain rules were in place to protect their value.
Their government officials changed the rules, mid-stream, as it were, and it really was criminally unfair to them.
Many are going bankrupt.
Taxis in my city anyway: can only have 2,000 total cars on the road, can’t surge price, can’t match rides with people.
TNCs can have as many as they want (40,000 by Uber’s own statement), can surge price, and can match people together to share rides.
TNCs burn through billions of venture capital to subsidize their rides (trust me, it costs way more than $4 to take you to work in the morning) as they attempt to siege war the taxi drivers to death. Anti-trust.
Taxis are also subject to far more regulation, from random mechanical checks to yearly drug tests to having to have their yards in the city to auto detailing specs to fbi live scan vetting etc etc etc - required to take animals, have so many cabs that take wheelchairs, 24 hour audio/video recording, keep a complaints board open. . . all kinds of laws. Which the TNCs do not have at all.
Creative destruction.
We had a similar situation in a town near me a while back. This case involved liquor licenses. The town only gave out a limited number of them, so people were buying them for hundreds of thousands of dollars and just sitting on them without ever opening a business establishment. The value of these licenses dropped immediately when the town threatened to flood the market with a bunch of additional licenses just to raise revenue.
The individual owners who scrimped and saved so they could own their own medallion are the people being screwed over here while the government who charged the high fees and limited supply are the major beneficiaries.
Just like getting a home equity loan.
there was chaos and carnage in the buggy whip industry after the first model Ts began to roll out.
taxi medallions were artificially (read: through government interference) expensive anyway.
Clearly the taxi drivers were overcharged for their medallions.
Time for a refund to reflect current values.
1 million is excessive, any way you care to look at it.
Isn’t this illegal under antitrust legislation.
I can invest $1 million in equipment for my plant and make significantly more money then any taxi operator/driver.
Communist systems dictating how many taxis are allowed to exist should be abolished.
I live in a smallish community - 35,000 which includes 12,000 college students.
All spirits licenses (ASL) cost $750,000. Beer and wine just $100,000.
The Montana Tavern Association lobbies the state government successfully to keep license quotas as they are.
About every five to 10 years a new ASL is allowed in our community and given out by a lottery system.
It’s a scam, but it’s not going to change anytime soon here.
As I understand it (and I could well be wrong), the medallions were originally issued at a given price paid to the city. The city stopped issuing new medallions years ago, so the supply became fixed even as the need expanded. The medallions were bought and sold from individuals or companies at whatever price the market would bear, thus the cost to buy a medallion became astronomical. Now, with Uber and Lyft cutting into the money a taxicab can earn, the value of the medallions has dropped. The only way to get a refund is if the guy who sold you the medallion feels really sorry for your investment’s loss—not very likely.
And let it be noted...just as with the medallions, you’re not buying them from the government...you’re buying them from the current owners.
Absolutely.
A friend of mine ‘won’ the lottery for a new all spirits license about five years ago.
Se spent $10,000 for the license and she leases it to a new Bar in town for a lot more than that each year.
It's nice work if you can get it. I invest a lot, and of course there's risk to anything. But the search for value had people panning for gold during the Gold Rush, and mining bitcoins during the early bitcoin days.
What's bad is when the threat of force is used to de-risk that return, whether it's gang force or, as in the case of the taxi medallions, governmental.
Some might argue that the medallion system leads to better vetting of the drivers for criminality. That might have been true at one time, but I've had a lot of seedy cab drivers.
Gang, what do you think--are Uber drivers statistically a better lot than regulated taxi drivers or not?
My city has had a single longstanding taxi/bus/limo operator grow from rich to unbelievably wealthy by payoffs and kickbacks to get contracts and exclusive areas for at least the last 40 years... before Uber and Lyft nobody could compete and rates were sky high with poor service.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.