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Taxi Medallion Prices Plummet Under Pressure From Uber
HughPickens.com writes Most major American cities have long used a system to limit the number of operating taxicabs, typically a medallion system: Drivers must own or rent a medallion to operate a taxi, and the city issues a fixed number of them. Now Josh Barro reports at the NYT that in major cities throughout the United States, taxi medallion prices are tumbling as taxis face competition from car-service apps like Uber and Lyft. The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data. "I'm already at peace with the idea that I'm going to go bankrupt," said Larry Ionescu, who owns 98 Chicago taxi medallions. As recently as April, Boston taxi medallions were selling for $700,000. The last sale, in October, was for $561,000. "Right now Uber has a strong presence here in Boston, and that's having a dramatic impact on the taxi industry and the medallion values," says Donna Blythe-Shaw, a spokeswoman for the Boston Taxi Drivers' Association. "We hear that there's a couple of medallion owners that have offered to sell at 425 and nobody's touched them."
The current structure of the American taxi industry began in New York City when "taxi medallions" were introduced in the 1930s. Taxis were extremely popular in the city, and the government realized they needed to make sure drivers weren't psychopaths luring victims into their cars. So, New York City required cabbies to apply for a taxi medallion license. Given the technology available in the 1930s, It was a reasonable solution to the taxi safety problem, and other cities soon followed suit. But their scarcity has made taxi medallions the best investment in America for years. Where they exist, taxi medallions have outperformed even the Standard & Poor's 500-stock index. In Chicago, their value has doubled since 2009. The medallion stakeholders are many and deep pockets run this market. The system in Chicago and elsewhere is dominated by large investors who rely on brokers to sell medallions, specialty banks to finance them and middle men to manage and lease them to drivers who own nothing at all. Together, they're fighting to protect an asset that was worth about $2.4 billion in Chicago last year. "The medallion owners seem to be of the opinion that they are entitled to indefinite appreciation of their asset," says Corey Owens, Uber's head of global public policy.. "The taxi medallion in the U.S. was the best investment you could have made in the last 30 years. Will it go up forever? No. And if they expected that it would, that was their mistake."
The current structure of the American taxi industry began in New York City when "taxi medallions" were introduced in the 1930s. Taxis were extremely popular in the city, and the government realized they needed to make sure drivers weren't psychopaths luring victims into their cars. So, New York City required cabbies to apply for a taxi medallion license. Given the technology available in the 1930s, It was a reasonable solution to the taxi safety problem, and other cities soon followed suit. But their scarcity has made taxi medallions the best investment in America for years. Where they exist, taxi medallions have outperformed even the Standard & Poor's 500-stock index. In Chicago, their value has doubled since 2009. The medallion stakeholders are many and deep pockets run this market. The system in Chicago and elsewhere is dominated by large investors who rely on brokers to sell medallions, specialty banks to finance them and middle men to manage and lease them to drivers who own nothing at all. Together, they're fighting to protect an asset that was worth about $2.4 billion in Chicago last year. "The medallion owners seem to be of the opinion that they are entitled to indefinite appreciation of their asset," says Corey Owens, Uber's head of global public policy.. "The taxi medallion in the U.S. was the best investment you could have made in the last 30 years. Will it go up forever? No. And if they expected that it would, that was their mistake."
Why are medallions even sold as an asset, instead of leased from the city government? It just creates a vehicle for private rent-seeking and speculation. Some Slashdot users have tried to answer this in comments to earlier stories about Uber by treating a medallion as a share of the city's curbside "real estate". I can sort of see this, but why isn't it taxed like any other commercial real estate?
This. The taxi companies are all focused on the fact Uber and Lyft are working without regulations as if that was the reason for their success. Yes, having lower prices most certainly makes them more attractive, but that's not all of it. Getting a taxi is a terrible experience. If you're lucky, you can hail one, but if you need to call one up... Enjoy waiting for any amount of time between 30 seconds and an hour, the taxi never reaching you, you having no idea where they are, the taxi arriving as a tiny Yaris when you specifically asked for a large car because you have luggage, etc.
One of the big deals about Uber for me is that their app and infrastructure makes the taxi companies look like pathetic dinosaurs. Calling a lift is easy, you can track their position in real time, if something goes wrong or if they're not responsive you can deal with that, you can pay through the app... It's just a much better user experience. Taxi companies probably never even heard of the term, and they're looking extremely stupid for it.
The parent comment shouldn't be modded down. It's 100% correct, even if some of the 'social justice warrior' types here don't like the truths it exposes.
In most cities, taking a taxi is an absolutely awful experience. And it's not just the occasional bad experience. Every single experience is fucking awful!
The drivers are one of the worst parts of these bad experience. The parent is right, they usually are third-world foreigners who often don't speak the native language well at all, and often don't even know the city they're driving in well!
It's bad enough when locals have to deal with this, when they know where they want to go and how to get there. But it gets even worse when it's a traveler who may not know the city well, trying to communicate their destination to a recently-arrived third-worlder who also doesn't know the city well.
And taxis usually are dirty and grimy. I think this has to do with the drivers in many cases, too. These third-worlders bring their native land's lack of cleanliness with them to the first-world. The insides of their taxis do look and smell like the slums of Mumbai, the shit-ridden streets of Lagos, or the rotting corpses of Baghdad.
If all that weren't bad enough, the price is astronomical for what you get, assuming the taxi driver isn't screwing you over in some way. Why the hell would anyone want to pay $30 to travel a mile or two in third-world conditions? The parent is right, you're better off saving your money and walking. If you're taking more than two taxi trips in a given day, you really are better off renting a car. It's idiotic that it costs $30 for five minutes of their time, and a couple of miles of distance.
The situation will never improve as long as the facts are suppressed because some people are worried that they might "offend" these third-world taxi drivers who provide shitty service.
I understand the need for regulations. e.g. to be sure that the meters are checked and legit and that the cars are safe and the driver has a legitimate drivers licence.
However that is not what the medailions are about anymore. What should have been done is get rid of the medailions and give out licences with a specific set of rules that is not limited by numbers.
Safe car, medical test for the driver (e.g. eye sight), check on the meter, technical test of the car every X months, ...
Don't fight for your country, if your country does not fight for you.
That's the only difference, albeit just a technicality. Old-school taxis can be flagged down by waving your arm or calling their cell phone, whereas Uber taxis are flagged down by sending a "flag taxi" message over the Internet. I don't see much difference between the two, other than the internet flag down can be used to flag down a taxi at a much longer distance than can be done by waving your arm.
Uber is still like a regular taxi: both are used for inter-city personal transport and the fares are similar. So why does uber get to go beyond the fixed taxi quota?
Don't invest in and artificially scarce commodity.
You mean Bitcoin?
I know I'm going to be modded down, but it had to be said.