Comments on: "I'm no pusher. I never have pushed [taxicab medallions]."

"I'm no pusher. I never have pushed [taxicab medallions]."

obscurator — Mon, 24 Oct 2011 21:33:47 -0800

Last month, The Atlantic reported that since 1980s, the price of a metallic NYC taxi license has grown four-times faster than the average home or a brick of gold, claiming it to be a wonderful "inflation hedge." This report proved prescient; on Friday two such medallions (which merely represent the taxi's license) just sold for $1 million apiece — a 42% increase just since August. Also on Friday, mere hours after reading the newsstand headlines, Midtown Manhattan resident Tom Poteat looked down to see a medallion, unattached to its taxi, lying on the sidewalk.

By: wilful

wilful — Mon, 24 Oct 2011 21:45:16 -0800

If Mr Poteat can benefit from possession of the physical plate, then there is something deeply fucked up in NYC's regulatory regime. Thankfully, reading the article, that is not so. Here are taxi licence prices for around Australia. And monthly licence fees. Not really very different to NYC.

By: empath

empath — Mon, 24 Oct 2011 21:49:47 -0800

How can you possibly make a million dollars as a cab driver in NYC?

By: jacquilynne

jacquilynne — Mon, 24 Oct 2011 21:51:43 -0800

By: michaelh

michaelh — Mon, 24 Oct 2011 21:53:48 -0800

Licenses are rented to cab drivers; they don't have to have a million dollars.

By: koeselitz

koeselitz — Mon, 24 Oct 2011 21:55:50 -0800

empath: “How can you possibly make a million dollars as a cab driver in NYC?” You don't – it's an investment that pays itself back over time, and rather handsomely at that, too. From the "just sold" link above: “We're basically talking about a real income stream, here, of about $75,000 per year. (Let's assume, for the sake of argument, that the income from a taxi medallion rises at the same rate as inflation.) That's a real yield of 7.5% on a $1 million investment — which isn't half bad at today's interest rates. Put it this way: how much would a bond paying a real yield of $75,000 a year cost? At the most recent auction, the 29-year TIPS cleared at an interest rate of 0.999%. At a 1% real yield, an income stream of $75,000 a year would cost you $7.5 million. Now you don't actually get $75,000 a year if you own a medallion. You have to pay for maintenance, insurance, and workers comp; you also have to pay someone to manage your drivers. But even if you bring the income down to $50,000 a year, that's still a pleasant 5% yield on your money, and what's more it's a yield which behaves much more like a real yield than a nominal yield. Paying $1 million for such a thing doesn't seem silly to me, especially when there's a lot of room for capital gains as well.”

By: kersplunk

kersplunk — Mon, 24 Oct 2011 21:57:37 -0800

Similar thing on a much smaller scale happened in Dublin - taxi numbers were capped at a stupidly low rate (I remember queueing in ranks for an hour or so to get a taxi around 2002), drivers were paying £70,000 for second hand plates, the government deregulated the market and abolished the cap, and said drivers were quiet upset.

By: IvoShandor

IvoShandor — Mon, 24 Oct 2011 22:33:55 -0800

and said drivers were quiet upset Until the great silent taxi-driving majority get vocal, there will be no change they can believe in.

By: The Whelk

The Whelk — Mon, 24 Oct 2011 22:54:41 -0800

The current medallion system is capped at an absurdly low number but there is no reason for any of the interested parties to raise it.

By: twoleftfeet

twoleftfeet — Mon, 24 Oct 2011 23:07:27 -0800

No taxiation without representation.

By: Blazecock Pileon

Blazecock Pileon — Mon, 24 Oct 2011 23:36:22 -0800

How do you make a living in NYC on 50k per year?

By: rodgerd

rodgerd — Tue, 25 Oct 2011 00:11:44 -0800

How can you possibly make a million dollars as a cab driver in NYC? It's not the drivers, it's the rentiers who buy the plates and then charge the taxi drivers to use them.

By: delmoi

delmoi — Tue, 25 Oct 2011 00:19:55 -0800

How do you make a living in NYC on 50k per year? The median household income in Manhattan is $47,030, $32,135 in Brooklyn.

By: delmoi

delmoi — Tue, 25 Oct 2011 00:22:13 -0800

We're basically talking about a real income stream, here, of about $75,000 per year. (Let's assume, for the sake of argument, that the income from a taxi medallion rises at the same rate as inflation.) That's a real yield of 7.5% on a $1 million investment — which isn't half bad at today's interest rates.

And, I would imagine you can swell the medallion at market rates when you want to cash out. So it's more like a stock then a bond. It's also more risky then a bond, since NYC could increase the number of cabs on the street at any time.

By: obscurator

obscurator — Tue, 25 Oct 2011 00:45:05 -0800

What's most striking to me about this "yellow" rush is the nexus of risky investment and war torn Crown Victorias, unless this actually happens.

By: Civil_Disobedient

Civil_Disobedient — Tue, 25 Oct 2011 01:06:20 -0800

How do you make a living in NYC on 50k per year? Get a crappy apartment and don't go out very much. Also, save next-to nothing so when you've finally had enough and decide to leave you've got nothing to show for it. That's the part of the New York Dream they don't like to talk too much about.

By: rhizome

rhizome — Tue, 25 Oct 2011 01:44:52 -0800

It's not the drivers, it's the rentiers who buy the plates and then charge the taxi drivers to use them. Every once in awhile here in San Francisco there are rumblings about requiring license holders to drive rather than rent their medallions out. It's a sick, mobbed up system that should remind everybody of its corruption every time they have been waiting a year for a cab.

By: delmoi

delmoi — Tue, 25 Oct 2011 01:55:00 -0800

unless this actually happens. Dear god that's ugly.

By: Joe in Australia

Joe in Australia — Tue, 25 Oct 2011 02:04:39 -0800

The problem with requiring owners to drive is that owners already have to get people to drive the other shifts - medallions are too valuable to leave the car in a garage most of the day. And if you can hire people to drive other shifts it's not hard to arrange for them to drive "your" shifts. Also, many (most?) medallion owners have some-to-many medallions and they would scream blue murder if they were forced to dispose of them in a fire sale. They probably acquired them as a sort of pension plan, and (although I despise rentiers) I have a certain amount of sympathy for them.

By: GenjiandProust

GenjiandProust — Tue, 25 Oct 2011 02:51:27 -0800

medallions are too valuable to leave the car in a garage most of the day If they were licenses that were sold at a reasonable rate rather than auctioned, this would not be a problem. License the drivers, not the cars. The current system, I expect, mostly exists to keep independent operators out of the business.

By: Skeptic

Skeptic — Tue, 25 Oct 2011 02:55:17 -0800

As Joe in Australia points out, a big obstacle to opening up the system is that it would be equivalent to an expropriation of those who have already paid big money to get their licences. A relative of mine was, for a short period, mayor of a small city in Spain with a similar artificial taxi scarcity. She was nearly lynched when she attempted to issue new taxi licences. This said, there are good reasons for restricting access to the taxi market. When the Dutch government opened it up to competition, the result were the Dutch Taxi Wars, which were a good case study of the unintended consequences of liberalisation (there was even a movie). In an ideal world, acess to the taxi market should not be a matter of deep pockets, I believe. Perhaps the best solution is an examination, like the "Knowledge" of London Black Cab drivers.

By: aeschenkarnos

aeschenkarnos — Tue, 25 Oct 2011 04:01:47 -0800

Another option is a buyback, however to work properly that has to happen very suddenly, ie allowing minimal time between the decision to do it (and the assessment of the current market rate), and the implementation.

By: Skeptic

Skeptic — Tue, 25 Oct 2011 04:24:36 -0800

Another option is a buyback Would be perhaps, if local governments weren't almost universally skint. At one million dollars each, buying back 13,000 NYC taxi licences would cost $13bn. I can't imagine that Mayor Bloomberg could justify such an expenditure for the benefit of taxi users at the expense of things like schools and public transportation. You may argue that the city could recoup the cost by selling many more licences at a more reasonable price. This overlooks the fact that what makes the value of the licences is just their scarcity. If they were available in larger amounts, the price that the city could extract for them would crash. Let's suppose that the city, after the buyback, would issue an unlimited supply of licences at a fixed price of $1000 each. To recover its investment, it would need to sell 13 million licences. Somehow I don't believe there are 13 million people interested in running a NYC taxi, even at "just" $1000 per licence.

By: scruss

scruss — Tue, 25 Oct 2011 04:38:47 -0800

There's a court case in Toronto about the whole two-tier taxi licensing thing. Standard plate owners can rent the plate out, have multiple drivers, or sell the plate. Ambassador drivers must be owner-operators: the can't rent the plate out, must be the sole operator (and thus limited to a few hours a day), and cannot sell the plate to anyone. According to the plaintiff, Standard/Ambassador plate ownership is split along racial lines, so it's discriminatory.

By: Holy Zarquon's Singing Fish

Holy Zarquon's Singing Fish — Tue, 25 Oct 2011 05:02:12 -0800

Or they could just refund the most recent purchase price and tell anybody who complains that taxi licenses weren't designed as a vehicle for speculators. Yes, I know, that would require a spine. I can dream.

By: Ad hominem

Ad hominem — Tue, 25 Oct 2011 05:24:25 -0800

That's the part of the New York Dream they don't like to talk too much about Oh come on guys. There are people born and raised in New York that live on tips from delivering Chinese food paid the table. I don't go out of my way to badmouth whatever hick towns you guys are from so leave New Yorkers alone.

By: EmpressCallipygos

EmpressCallipygos — Tue, 25 Oct 2011 05:36:50 -0800

How do you make a living in NYC on 50k per year? That's...actually about what I make. I live in a fairly-comfortable apartment in Brooklyn -- with a roommate -- I don't go out to lots of restaurants, and I avail myself of a lot of the cheap or free events. I also don't have a car, so no parking fees or insurance; I go to a cheap gym; and I do a lot of evenings-in with friends rather than evenings-out. And that's while trying to pay off some debt, so a big chunk of that goes towards that goal. So I may be able to splurge even more in a couple years. ...But that's actually not why I came in, I came in because of this: Midtown Manhattan resident Tom Poteat looked down to see a medallion, unattached to its taxi, lying on the sidewalk. Because Tom was an old neighbor! We both lived in the same building on the Lower East Side in the late 90's; he and his roommate were about two doors down the hall. Nice guy -- we shared quite a few cabs to work, in fact. He was working in Midtown (I assume he still is), so good to know that he now lives within walking distance of his job and his only taxi association is recreational and idiosyncratic.

By: miyabo

miyabo — Tue, 25 Oct 2011 06:05:19 -0800

The idea of selling permanent medallions was foolish to begin with. If they had simply charged an annual fee, they could change it year to year to adjust the number of taxis to meet demand and space on the road. But now that permanent medallions are out there, there's massive lobbying pressure to keep the number limited and taxi prices high. Last time I was in NYC with my wife, we walked out of JFK and a friendly taxi driver helped us load our luggage into the trunk. Then a cop car pulled up. Two cops jumped out and wrestled him to the ground, handcuffing him with his face pressed into the asphalt. They dragged him off into their cruiser and pulled away. The taxi was still running with the doors open and our luggage in the trunk. Apparently that's what happens if you try to drive a taxi without the medallion.

By: headnsouth

headnsouth — Tue, 25 Oct 2011 06:25:09 -0800

Last time I was in NYC with my wife, we walked out of JFK and a friendly taxi driver helped us load our luggage into the trunk. Then a cop car pulled up. Two cops jumped out and wrestled him to the ground, handcuffing him with his face pressed into the asphalt. They dragged him off into their cruiser and pulled away. The taxi was still running with the doors open and our luggage in the trunk. Apparently that's what happens if you try to drive a taxi without the medallion. Did the cops or the taxi driver tell you that was why he was being arrested?

By: miyabo

miyabo — Tue, 25 Oct 2011 06:51:02 -0800

They said something like "Roger, this is what happens when we see you driving an unlicensed cab." (They definitely recognized him and knew his name -- presumably this wasn't a first offense.)

By: miyabo

miyabo — Tue, 25 Oct 2011 06:51:21 -0800

(The cops didn't acknowledge our presence at all.)

By: Ad hominem

Ad hominem — Tue, 25 Oct 2011 06:52:58 -0800

Yeah I don't get what happened in that story. Was it a yellow cab? There are hack lines at the terminals so he should have been waiting in that, don't known if skipping the hack line is punishable with arrest though. If it was a car service guy, they are not supposed to pick up random passengers who didn't call. Don't know if they would handcuff the guy and haul him off, maybe there was a sting on gypsy cabs going on?

By: Skeptic

Skeptic — Tue, 25 Oct 2011 07:00:00 -0800

"Roger, this is what happens when we see you driving an unlicensed cab." It sounds like his previous offenses may have involved more than just driving an unlicensed cab. You probably narrowly escaped being overcharged, or even robbed (or worse).

By: postel's law

postel's law — Tue, 25 Oct 2011 07:03:27 -0800

Are we sure they weren't other taxi drivers masquerading as cops? And since when are cops okay with unattended vehicles at the airport?

By: Ad hominem

Ad hominem — Tue, 25 Oct 2011 07:06:27 -0800

At any rate you too can buy in. Medallion financial Corp invests in medallions and trades under the ticker TAXI.

By: dixiecupdrinking

dixiecupdrinking — Tue, 25 Oct 2011 07:13:29 -0800

It makes me sick that while medallions trade at over $1 million, TLC and the cab drivers are constantly whining about the need to raise fares. We've created a system that allows private parties to buy in at whatever price they want (privatizing all benefits of the system) and then lean on a public entity to set fares high enough to recoup their obscene investments (publicly dispersing all downsides of the system). If you insist on privatizing public transit, then put your money where your mouth is and do it for real: make licenses free to all drivers who are qualified and interested, and let the "free market" dictate the optimal number of cab drivers and prices to riders. Otherwise it's just the public subsidizing a few guys with garages in Queens.

By: miyabo

miyabo — Tue, 25 Oct 2011 07:15:48 -0800

Yeah, honestly the strangest thing was that they just left the vehicle sitting there in a loading zone. Presumably they called it in to a tow truck, but we didn't stick around long enough to watch. I'm sure they were cops, but they may have been airport cops and not NYPD.

By: FatherDagon

FatherDagon — Tue, 25 Oct 2011 07:38:51 -0800

That's the part of the ~~New York~~ American Dream they don't like to talk too much about. Let's not limit our scope here, this is the modus operendi for tens of millions of people across every state in our great nation.

By: otto42

otto42 — Tue, 25 Oct 2011 07:51:31 -0800

The Taxi and Limousine Commission (TLC) should follow the model of the New York Stock Exchange (NYSE) and go public. The TLC and pre-IPO NYSE appear to have very similar characteristics. Like the TLC, the NYSE had a limited number of seats (medallions), little incentive to increase the number of seats, since the seat owners did not want to lose their investment, and their own rule making structure. The NYSE, which was losing market share to the other exchanges (NASDAQ), the upstairs market, and program trading, etc. recognized that the old system of selling seats was a hindrance to competing with the other stock trading systems and would eventually lead to its demise. Instead of circling the wagons to protect their franchise, the NYSE incorporated as a for-profit and sold shares. The proceeds of the offering were used to pay back all of the seat holders at the market price for seats at the time, in NYSE shares. The old seat holders (now share-holders) now don't mind having extra entrants, since each new NYSE dealer contributes incrementally to the NYSE, and ultimately, their own profits. The TLC's revenue will consist of fees for using the NY TLC logo and Yellow Cars. They will issue more logo and Yellow licenses and collect more than they ever thought they could from the occasional auction. Of course, to keep it fair, other independent cab companies will have to be allowed to pick up passengers. A Nasdaq version of the taxi cab business, maybe with distinctive green colored cars, may even give Yellow cabs a run for their money. Maybe they could charge less, and use less expensive cars; or charge more and guarantee every driver is licensed or patrol the outer borough places Yellow cabs won't go. In short, there is a model for ensuring existing medallion owners don't lose their investment, and increasing the number of cabs on the streets. If the NYSE seat owners could be persuaded to give up their seats, so can the medallion owners.

By: showbiz_liz

showbiz_liz — Tue, 25 Oct 2011 07:58:11 -0800

How do you make a living in NYC on 50k per year? People always say this and it boggles my mind. Right now I make about 30,000 before taxes. I have $500 a month in student loans. I live in Queens with roommates, paying only slightly more in rent than I did in my NC college town. While I'm not exactly "comfortable," I wouldn't consider myself to be poor at all. I can go out for beers, buy shoes occasionally, fly home for Christmas. Why do people think all of NYC = lower Manhattan?

By: desjardins

desjardins — Tue, 25 Oct 2011 08:16:13 -0800

I don't understand why license holders should be required to drive. We don't require liquor license holders to work behind the bar.

By: Mitheral

Mitheral — Tue, 25 Oct 2011 08:53:30 -0800

I don't really understand what benefit cities derive from creating an artificial scarcity of taxis. The actual auction prices can't represent that significant of a revenue stream to New York that they couldn't replace it by smaller fees on more cabs. There is a public interest in regulating safe taxis, both mechanically and operationally. Not only for residents but for business and tourist travellers. A deregulated system encourages a cut throat race to the bottom that rewards defered mainitaince and poor labour practices because you have too many cabs chasing the available business. That's not to say the current medallion system is optimal just that some kind of volume regulation of taxi systems is generally in place in most cities as a way of ensuring a minimum revenue stream.

By: Civil_Disobedient

Civil_Disobedient — Tue, 25 Oct 2011 08:58:14 -0800

I don't go out of my way to badmouth whatever hick towns you guys are from so leave New Yorkers alone. The hick town I came from is called Brooklyn. BROOK-LIN. Though I wouldn't really call it a hick town—I mean, I guess you could if you're from Singapore or Neo Tokyo or something. A lot of New Yorkers haven't heard of it, since it might involve crossing a bridge to get there.

By: Blazecock Pileon

Blazecock Pileon — Tue, 25 Oct 2011 09:11:17 -0800

I don't go out of my way to badmouth whatever hick towns you guys are from so leave New Yorkers alone. I wasn't trying or intending to badmouth New York, just ask a straightforward question, which I now regret doing. Sorry, carry on.

By: otto42

otto42 — Tue, 25 Oct 2011 09:16:39 -0800

"I don't really understand what benefit cities derive from creating an artificial scarcity of taxis. The actual auction prices can't represent that significant of a revenue stream to New York that they couldn't replace it by smaller fees on more cabs." The regulations that have resulted in an artificial scarcity has made NYC's taxi fleet less safe. The fares are also regulated so covering the cost of the medallion can only be achieved through lowering maintenance and labor expenses. Deferring maintenance results in unsafe cabs and lower labor costs ensures those with inadequate driving skills or violations remain as possible, or are, employees. Additionally, the remaining drivers that may not be bad drivers still have to drive at hours when they probably should be resting.

By: 1adam12

1adam12 — Tue, 25 Oct 2011 09:16:49 -0800

There is no reason an investment market in government-issued licenses should be allowed to exist, full stop. There is no reason a secondary market should exist, either. These can and should be treated like any other form of business license, and regulated accordingly. France has a vaguely similar system for regulating notaries and the result is artificial scarcity, massively jacked-up fees, and corruption. A million dollars for a license to do something that keeps the actual worker in poverty is insane.

By: chimaera

chimaera — Tue, 25 Oct 2011 09:22:58 -0800

They said something like "Roger, this is what happens when we see you driving an unlicensed cab." Do you see what happens, Larry? Do you see what happens when you drive a TAXI in the ALPS?!?

By: rhizome

rhizome — Tue, 25 Oct 2011 10:44:22 -0800

A deregulated system encourages a cut throat race to the bottom... Deregulation? No, expansion. a big obstacle to opening up the system is that it would be equivalent to an expropriation of those who have already paid big money to get their licences. The medallions were sold between private parties, there's no expropriation going on. The medallions just lose that value, the same as any collectible when the market shifts. If the people who spent big money on medallions have a problem with it, maybe they should have worked to expand the system rather than buying into it.

By: badgermushroomSNAKE

badgermushroomSNAKE — Tue, 25 Oct 2011 11:39:38 -0800

How do you make a living in NYC on 50k per year? Can't answer that, but I do know that there's a NYC cab driver who lives down the street from me, way up in the far reaches of northern Westchester County. So perhaps, like much of the NYPD, lots of cab drivers don't actually live in the city they serve?

By: Skeptic

Skeptic — Tue, 25 Oct 2011 12:59:11 -0800

The medallions were sold between private parties, there's no expropriation going on. Houses are also sold and bought between private parties. That does not mean that if the government comes in and takes yours, it isn't an expropriation. Of course, in this particular case, the medallions wouldn't actually be taken away, but that would change little for the guy who has taken a $1 million debt for an asset suddenly made worthless by an act of government (and not by "a market shift"). Zarquon's proposal of a buyback at the most price of the most recent sale of each medallion comes closest to fairness, except that it would favor the most recent buyers (that is, mostly speculators) compared to those who bought their medallion 30 years ago, have actually been working it for a modest living, and expected it to at least provide for their retirement. So, what should have been done would have been to gradually expand supply a long time ago to prevent such a speculative market bubble. At this stage, a slow expansion to gradually reduce the price seems the only option, but this should be done very, very carefully, since such "soft landings" are notoriously difficult to control in any market.

By: ironjelly

ironjelly — Tue, 25 Oct 2011 13:59:33 -0800

We had the same problem in Dublin. Deregulate, deregulate! The only people who get hurt are the speculating medallion-holders.