Regulation D.C. Taxi Heist

How a new law would screw drivers and riders


Washington, D.C. is considering a bill that would require every cab driver in the city to own a special permit called a medallion. The total number of medallions would be capped at 4,000, which would reduce the current number of cabs by more than one-third and put thousands of drivers out of business. (The city government has no idea how many licensed cabs are in the district, though estimates range from 6,500 to 10,000.)

If that weren't bad enough, most drivers wouldn't have the option of buying a medallion. The first set of medallions would be offered for sale to the minority of cabbies who have been driving for at least five years and who live in Washington D.C. (Again the city government has no idea how many current drivers meet this criteria, but rising real estate prices and weak city services have led many drivers to leave the district.)

Who will be offered the next set of medallions, according to the bill? That would be cab companies, who could then rent medallions to drivers. This system would destroy the relatively open-access taxi industry in D.C., in which the majority of drivers are owner-operators free to make their own schedules and keep whatever money they earn on the job. In cities such as New York and Boston, drivers pay upwards of $800 a week to rent their medallions.

Cab riders would also suffer under the new regime. Reducing the number of taxis on the street will make it harder to catch a cab, especially in non-tourist neighborhoods and areas far from business districts. And the medallion system will almost certainly drive up prices. A 2010 study by D.C.'s own Department of Finance found that fares in cities with medallion systems are 25 percent higher on average than in cities in which the supply of cabs isn't restricted.

Given all that, why would the nation's capital consider implementing such a system? D.C.'s medallion bill was written by lobbyist and former city councilman John Ray, who was hired by taxi magnate Jerry Schaeffer. Ray has worked as a lawyer for councilman Harry Thomas, and it was Thomas who introduced Ray's bill in the city council. The other major sponsor of the bill: Council member Marion Barry, the former mayor best known for his 1990 arrest for smoking crack in a hotel room with a girlfriend.

In a recent letter in the Washington Post, Ray argued that because the cab industry is open entry and unregulated it's been susceptible to corruption. But in practice the DC taxi commission, which currently regulates the industry, has its own history of corruption. And the commission is so wary of scrutiny that when reporter Pete Tucker snapped a photo on his cellphone at a recent public meeting he was dragged out and arrested. Producer Jim Epstein captured Tucker's arrest on his mobile phone. Later, Epstein was also arrested after resisting attempts by the taxi commission and us park police to confiscate his camera phone. When Tucker was arrested, cab drivers, stormed out of the meeting in protest.

For more on the medallion bill, read Reason's Sam Staley in the Washington Post on medallions, and on how regulation has spawned corruption in D.C.'s taxi industry.

Produced by Jim Epstein, with help from Kyle Blaine, Lucas Newman, and Jack Gillespie. Narrated by Nick Gillespie.

Approximately 6 minutes.

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  1. Awe, no DC Cab image? I am disappointed.

  2. Yeah, first thing I thought of, too, and I never even saw the movie. Mr. T, right?

    1. Yup, Mr T. Small DC Cab company vs a big company, and of course the small company can’t afford the government licensing fees to be allowed to pick people up at the airport.

  3. If I were promoting a bill like this, I’d sure want to arrest skeptical journalists.

    1. The rich and powerful will always find ways to influence government. This is why we need government to implement regulations which curb the power of the rich and powerful. IT’S NOT THAT HARD TO FIGURE OUT GUYS.

      1. Give us the unfilthy lucre!

  4. “How a new law would screw drivers and riders”

    But they MEAN WELL, that, after all, is really what matters. Who cares about RESULTS? All that really matters is that they claim to CARE about the people they are screwing over.

  5. Barry is slimy, but not because he was caught smoking crack with his mistress.

    Shouldn’t we be standing up for his right to smoke crack with his mistress?

    1. Yes. Just as much as I’d stand up for the right of the voters to know their mayor is a crackhead.

    2. bitch set me up.

      1. Bitch was snitchin’

    3. I agree – surely there’s something to bust Barry’s chops about other than his use of a non-state-approved intoxicant.

      How about his failure to pay taxes, his flipfloppping opposition to gay marriage, his graft via earmarks? Weak Jim & Nick. Weak.

      1. I don’t know about that, as Rick James said, cocaine is a hell of a drug.

  6. “””(The city government has no idea how many licensed cabs are in the district, though estimates range from 6,500 to 10,000.)”””

    So the same city which can’t even figure out how many licensed cabs there are in the district is going to efficiently run a medallion system? Yeah right.

    1. So what’s the big deal about the limited number of medallions then? It’s not like they’ll know when they’ve handed out the 4k.

      Seriously though….what kind of halfassed licensing are they running where they can’t even count the number of licensees?

      1. It’s not that they can’t count the number of licenses, they just simply don’t care. The number is irrelevant to the purpose of the medallions. The number of medallions isn’t based on the number of taxis needed to provide services effectively, it is based on how many independent drivers the big cab companies need to put out of business.

        Regulations like this one are designed to inflate the cost, and protect the main players in the industry from any future competition.

        1. yeah, sorry, no coffee yet, so I was thinking as if the licenses or the medallions would have any legitimate function whatsoever. silly wylie.

          1. They do have a legitimate function for the owners of large cab companies, and the politicians who receive campaign contributions from the large cab companies.

            The independent cab drivers have them selves to blame for the new regulations. If they got off their lazy butts, hired an expensive lawyer, formed a PAC and funneled campaign cash to their local politicians, these regulations could have easily been avoided.

            This is what happens when you don’t kick up some of your earnings to the bosses, you end up sleeping with the fishes.

            1. sorry again, “legitimate PUBLIC function”. but you knew that. (jeez free2, we get it, it’s about the contributions. trying to play devil’s advocate here.)

              1. “jeez freez” would have rhymed.

  7. I fuckin’ love those cab drivers.

  8. This is theft. All those times people joking or not type out taxation = theft would be wise to notice this one. This is where government is clearly forcing incentives for cronyism and corruption. This is why people hate government.

    I hope they back the fuck off and kill this bill. But cronyism runs deep and corruption rules the day.

    1. It’s a one-party town, so good luck with that.

    2. It’s theft in more ways than one. By forcing productive workers out of employment, the dependent class is increased and perpetuated.

      By keeping cab fares artificially high, money that could help to support other entrepreneurs (workers) is lost.

      Of course, all these government dependents need to be funded by theft from the remaining workers.

    3. You don’t need to say taxation. It is purely theft for the sake of theft. Theft for personal gain. Theft of a private business. These bureaucrats need to be assfucked with telephone poles.

      1. taken from phonehenge!

  9. If Jeffrey Schaeffer is white, this might send some lefties into a tizzy trying to reflexively defend greater regulation of a market. The rest will probably talk about campaign finance reform, but if it kills the bill, all the better.

  10. More needless regulation designed to give big business a leg up by allowing them to squash future competition.

    Rules like this are needed to protect the cab industry. If the supply of cabbies is allowed to go unfettered, some of the independent cab drivers may come up with a better, more efficient way to provide services, and eventually take business away from the big cab companies. If this happens, how will the owners of the taxi companies be able to afford their large campaign donations to local politicians?

  11. The slimy lawyer’s defense of his corrupt little plan is a hoot.

    “The medallion system works because it regulates the number of taxicabs and gives equity to taxicab owner-drivers.” I’m sold!

    “In the District, a ‘come one, come all’ system results in a disproportionate cab-per-resident ratio of one cab for every 93 residents. In New York and Boston, the cab per resident ratios are 1-to-625 and 1-to-338, respectively.” Yes, as a New Yorker who lives in a neighborhood cabs don’t go and everything else that isn’t city union run is banned, I’m glad my overlords have arrived at the optimum number for me.

    1. And ummm…dont the current taxicab owner-drivers have equity? WTF?

  12. Given all that, why would the nation’s capital consider implementing such a system?

    It’s a conundrum.

  13. But under the new system, the cabs will be spotlessly clean and comfortable, and the drivers will all be pleasant, articulate and knowledgeable!

    1. I’m so fucking sick of getting cabbies who can’t chat about 3d modeling or how great the latest version of LuxRender is.

  14. What hacks.

  15. In New York and Boston, the cab per resident ratios are 1-to-625 and 1-to-338, respectively.”

    It’s pretty disingenuous to try and compare the District of Columbia to all of New York City. A much fairer comparison would be D.C. to Manhattan only, which is where the overwhelming majority of NYC taxicabs spend most of their time operating.

    1. But then, would we not have to analyze what areas DC cabs do and do not go to? Where do the overwhelming majority of DC taxicabs spend most of their time operating?

      I’m asking.

    2. It’s not disingenuous to compare per capita ratios; that’s why they exist.

      1. It’s disingenuous when the ratios don’t mean a goddamn thing in the context of the argument he’s trying to make. One would have to take into account population density, the rate of car ownership, climate (people walk longer when it’s nice out), and a hundred other factors in order to calculate the “correct” number of cabs allowed to serve the citizens. Something tells me there’s an easier way…

    3. So why aren’t these ratios proof that NY and Boston are woefully undersupplied with taxis?

      1. They are, at least in NYC. We have 2 types of hire vehicles, cabs and car services. A cab is yellow and has an extremely expensive medallion, it is allowed to pick up street hails. A car service has a fairly expensive license and must be called on the telephone for a pickup, they are forbidden from picking up street hails. The problem is that all of the cabs stay in Manhattan, where most of the business is, and it can be difficult or impossible to catch a cab in the other 4 boroughs. An idea was floated whereby car services would be allowed to pick up street hails, only in the 4 outer boroughs, but the medallion owners threw a tantrum and the plan was scrapped. So a state created monopoly that refuses to serve a majority of the geographic location in which it is given the monopoly was able to influence the state to stymie the market entry of an entity that was willing to serve that geographic majority.

    4. For anyone who has ever lived in the outer buroughs that’s precisely the problem.

  16. thats actually kinda crazy when you think about it. Wow.


    Nothing more needs to be said.

    1. I’m sorry. I liked The Dark Knight, but Batman’s harassment of the drug dealers in Batman Begins was pretty disgusting.

      1. Oh, I’m sorry. That was Carmine Falcone. I get wop names mixed up all the fucking time.

        1. They all look alike, too.

  18. >D.C.’s medallion bill was written by lobbyist and former city councilman John Ray, who was hired by taxi magnate Jerry Schaeffer.

    And as a result, any cab company owned by Jerry Schaeffer should not be able to purchase any medallions should this pass lest it be viewed that he lobbied to have his competition reduced by government interference.

  19. From his letter to WaPo:

    Could it be that there are too many drivers chasing too few fares?

    It could be, but why would any rational person believe it is the government’s job to decide who should or should not catch those fares?

    Fuck you, John Ray.

    1. And if that is indeed the case, why can’t we expect the “problem” to solve itself as taxi drivers who can’t make enough fares exit the market?

    2. Too many drivers chasing too few fares sounds pretty good to me.

    3. With that statement alone we can conclude that the market has leveled off to a point where the amount of cabs vs the fare price is at equilibrium. Only an idiot, or someone with something to gain would throw a rock into this perfectly flat pond… Fucking statist garbage.

  20. What was amazing about that part of his letter was how naked his admission was that the regulatory goal was to provide job security and wage stability to the service providers, not to provide a service to the constituents. The honesty sort of blew me away. We all know that’s usually the deal lurking underneath, but rarely is it so brazenly put forth.

  21. I found this, dated 1996:…..troduction
    I have some problems with a few of their arguments, but Id be interested to find the other sides’ response. Anyone know where I can find good information on this topic?

    1. Also, that writer has worked for NYC DOT since 2007, imagine that. Still interested in more information though.

    2. He really doesn’t make any arguments to demonstrate the positive features of a medallion system to consumers. He trashes the alternative (free market competition) with statements like this:

      Passengers hailing a cab have little or no opportunity to assess the driver’s knowledge of geography, politeness or English-speaking ability

      He leaves unaddressed the fact that, with the medallion system, the chances of getting an English-speaking cab driver in Vienna or Berlin are hugely better than in New York. The crux of his muffin is that dropping the medallion system won’t fix things- he studiously avoids any demonstration that consumers have benefit from such a system.

  22. What’s the argument in favor of medallions? It just seems like such an obviously bad idea, I can’t imagine why anyone would support such a system.

    1. The attempts at legitimate arguments have focused on excess cabs clogging the streets, and on medallions supposedly increasing the quality of cab service in various ways.

      In other words, a whole buncha nonsense to cover up blatant corruption. They don’t even try very hard to cover it up in the DC government anymore.

      1. Gotcha, I’m guessing they envisage a fleet of hybrids with all the latest gadgets. As to the “excessive cabs clogging the streets” argument — if it becomes more difficult to catch a cab, people are more likely to purchase or rent their own car, leading to even more congestion… it’s hard to disagree with your conclusion.

        1. Is it ever really possible for “too few cabs” to be chasing “too few fares”? If people weren’t making a living from it, wouldn’t they be doing something else?

  23. I’m lost here, John ray claims that “… because the cab industry is open entry and unregulated it’s been susceptible to corruption” yet I fail to see how an open entry and unregulated market can support corruption. Are we entirely sure that his real problem isn’t that an open entry unregulated market is not susceptible to corruption?

  24. As a Pittsburgher, God knows it’s hard to be in DC, having to get used to constantly being able to get a cab by sticking my arm out.

    We should really get government on fixing that.

  25. How can we stop this? Is this something that we, as DC residents, can vote against? When I first read about this a few months ago, I was outraged. Once again, another law that makes absolutely no sense.

  26. Given all that, why would the nation’s capital consider implementing such a system? D.C.’s medallion bill was written by lobbyist and former city councilman John Ray, who was hired by taxi magnate Jerry Schaeffer. Ray has worked as a lawyer for councilman Harry Thomas, and it was Thomas who introduced Ray’s bill in the city council.
    Really a good article…

  27. The fewer cabs the better, in my opinion.

  28. -John ray claims that “… because -the cab industry is open entry and -unregulated it’s been susceptible to -corruption” /quote

    Yeah, and he’s gonna set a real nice example of how much corruption, too.

  29. I see that despite Reason’s advocating for the legalization of drugs, you are not above exploiting the arrest of someone using drugs. Shouldn’t you be trumpeting that instead of condemning him? I’m just trying to point out the contradiction here – you want to have it both ways – you want to moralize about drug use and you also want to say it should be legal.

    Pick a side.…..anding-fre

  30. “you want to moralize about drug use and you also want to say it should be legal.”

    No contradiction. I think recreational drugs are for losers and morons. I feel absolutely no compunction about judging people who abuse themselves in this way. I also think that the war on drugs has demonstrated the same thing that prohibition (of alcohol) demonstrated: prohibition doesn’t work. The costs to society of prohibition have far outstripped the negative consequences of recreational drug use.

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