Though I agree with the sentiment of the article, this statement is not exactly true. Car Services (radio dispatched) have filled this nitche for decades.
From wiki; "While medallion taxicabs in New York are always yellow, car service vehicles may be any color but yellow, and are usually black. For this reason, these taxi operators are sometimes called “black car” services. Despite the de jure prohibition on picking up passengers who hail on the street, some livery cabs nevertheless do so anyway, often to make extra money. When a livery cab engages in street pick-ups, it becomes known as a "gypsy cab." They are often found in areas not routinely visited by medallion cabs, and authorities tend to turn a blind eye to the practice rather than leave sections of the city without cab service."
In crony capitalism, just like in Communism, the authorities can’t regulate everything. There will always be a black market and eliminating it is impossible. Jailing people for making a living is usually more of a warning not to encroach on official turf. Apart from that people engaged in illicit economic activity can do as they please.
The cab scene in Manhattan is a wreck.