I have never heard of a legitimate reason why taxi licences should cost upwards of a million dollars. If you are arguing safety, then that is best handled with yearly inspections and payment for those. Also, ownership of the medallion is separate from the license to drive, so it has nothing to do with drivers’ skills.
My take is that it was all about bribes and kickbacks
“I have never heard of a legitimate reason why taxi licences should cost upwards of a million dollars.”
It is an artificial monopoly created by government for the enrichment of government. The legitimacy is, they can.
Its an artificial market. Cities fix the number available...which happens to create value out of thin air that can be sold off by corrupt government officials.
Some counties in California do the same with building permits.
The US does the same with peanuts
Its a longstanding tradition with corrupt gubmint officials.
That's because there is none. Licenses, permits, et al are nothing more than the government taking your rights and selling them back to you in the form of permission.
In NYC, the number of medallions was fixed at 11,787 in the 1930s until 1996, when a few were added so that there are now 13,287 in existence.
In 1937, a medallion cost $10. But, like pre-ban machine guns, the supply was fixed and the demand was elastic. If you didn’t have one, it was (and is) illegal to pick up passengers in the street.
So, the market price in 2005 was around $1.3 million. Cabbies had long since been priced out of the market, and la Cosa Nostra never really got into it, so most medallion cabs are owned by rich guys and leased to immigrants, who often end their shifts under water (owing the owner more than they made).
The NYC Yellow cab system is terrific (at least in Manhattan below 96th street), but with medallions now around $500K and plummeting, the industry is going to have to change.