Taxi Drivers Upset Their Medallions Losing Value, Governments Not Doing Enough to Protect Their Monopolies

A medallion in Chicago goes for a paltry $270,000 these days.



USA Today has an article about how the value of taxi medallions have been dropping because of the entry of services like Uber that connect fares to drivers while bypassing licensed taxi drivers. Such services are winning over former taxi customers who prefer the ease with which apps like Uber allow them to use their smart phones to hail a ride, and the other features it offers, like seeing who your driver is, being able to pay outside of the cab without the involvement of cash, and so on. Some of these features are innovations. Others are possible because the services can operate outside onerous government regulations of the taxi industry.

Those regulations, while limiting quality and the choice for consumers, have been a boon for the taxi industry, which can operate lucrative rackets in many jurisdictions. The most visible evidence of this boon is the taxi medallion, a license sold by local governments that permits a driver to operate a taxi. Drivers still have to go through whatever process the local government has set up for becoming a taxi driver—the medallion doesn't represent the privilege, or cost, of going through that process, but just the privilege of being allowed by the government to enter a controlled market. Unsurprisingly, such medallions have become an investment by people betting on the arc of government bending ever toward bigness.

USA Today reports:

Until recently in America's big cities, purchasing a taxi medallion—the city-issued license to operate cabs —was about as sound of an investment as they come.

But with the rise of Uber and other ridesharing services, the value of taxi medallions are plummeting, leading cabbies and fleet owners throughout the USA worried that their industry will be decimated if local and state government doesn't intervene.

"I have had a pretty successful thing," said Gary Karczewski, 65, a Chicago cabbie who inherited his medallion from his father 28 years ago and earned enough to purchase two homes and help send his two daughters to college by driving the equivalent of 80 times around the world. "My hope was to wind down soon and give whatever I could sell the medallion for to my mother. But I am not confident there's a market now."

In Chicago, which has the country's second biggest fleet with roughly 7,000 taxis, the median sale price for a medallion hovered around $70,000 in 2007 before reaching a median sales peak of $357,000 in late 2013.

And how much is the medallion in Chicago going for now? About $270,000. Karczewski's father acquired his taxi medallion more than 28 years ago, when it went for far less. And Karczewski inherited this medallion, this piece of metal (or paper?) that permitted him to be one of just 7,000 licensed taxi drivers in a city of 2.7 million. Sounds very caste-systemish, and brought to you by government. Karczewski wants sympathy that the government-created bubbled for taxi medallions has appeared to end with him holding the asset. Worse than sympathy, others in the wider taxi industry want government to do something about it. The taxi industry spent a lot to create the intricate cronyist relationship between local governments and taxi businesses and wants to protect their lucrative business. Via USA Today:

Ancillary industries are also feeling the pain.

Carriage News, a New England industry newsletter closed shop in March, as medallion financing agencies slowed issuing loans, making advertising unnecessary.

"The demise of Carriage News can be laid directly at the feet of the TNCs [transportation network companies] and the do-nothing politicians who allow these … operations to continue to erode the taxi industry," publisher Bob Keeley wrote in a front-page editorial announcing the 45-year-old publication's demise.

Do-nothing politicians "allow" you to participate in the voluntary exchange of currency for services (a ride) and aren't protecting the service providers they created a monopoly backed by force for, according to someone who covered the taxi industry for the taxi industry.

Worse for the taxi industry, the governments to which they've locked themselves into are preventing taxi companies from working on the most modest innovations. New York City, for example, wants to be able to approve any app taxi drivers in the city might use to let customers hail a ride from them the same way they can from services offered exclusively on apps. USA Today:

In New York, the Taxi and Limousine Commission is weighing a proposal that would create an agency that oversee the implementation of smartphone apps used in the taxi industry.

Under the proposal, the smartphone app operators would be required to approval before modifying their apps or face fines—a regulation that a powerful coalition of Silicon Valley companies told New York City Mayor Bill de Blasio would stifle innovation.

"While we do not develop software for transportation providers, we are gravely concerned by the unprecedented decision to subject software available around the world to pre-release review by a city agency," wrote the Internet Association, the tech coalition that includes Facebook, Google and Twitter.

Karczewski, the Chicago cabbie, is resigned about the taxi industry's "race to the bottom" but wonders what younger cabbies "who have a lot of skin in the game" are going to do. The battles against Uber, Lyft, and services like it are largely led by those seeking to protect the taxi cartels. Big, meddling governments, have put themselves in the position to skin a lot of people looking for an in on that cartel, and can still do a lot to thwart innovation in the rides industry. What would governments like today's have done if they had this kind of power a hundred years ago, when the auto industry was placing death at the door of the horse-drawn carriage industry—quite literally for many of the horses, who survived the innovation of trains but not automobiles.

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  1. Haaaaaaaa ha ha ha! Fuck those rent-seeking bitches!

    1. Why do you hate the…, never mind. I totally understand….

    2. Imagine if Chicago had slug lines, like DC. These hacks might go postal.

      1. First I’d heard the term. I couldn’t understand why taxi drivers would have or care about prologue in screenplays describing setting.

  2. We need such massive deregulation in this country that it’s hard to know where to start.

    1. How about using as guidance the Supreme Law of the LaHAHAHAHAHAAA!! Damn, couldn’t quite get it out!

      1. You joke, but if we….HHH…if we….HAAAAAAAAAAAHAHAHAHAHAHAHAHA!

        Oh dear…I almost got it out….

        1. What’s funny about judicial deference? Elections have consequences, DAMNIT.

  3. Perhaps they should take a clue from the buggy whip manufacturers and find a new market? Google: Bettie Page Whip (I have somehow failed to remember how to link here)

    1. I have a cunning plan. File for class action claims on behalf of professions that have been displaced. Demand reparations and punitive damages.

      1. Wait. Isn’t “displacement” already covered by ADA?

        1. Boats also have something to do with displacement. As do engines! Sue the boat and engine manufacturers, the bastards with their displacements of things!

          1. Yes, we can probably see similar pantie twisting in locations with boat taxis.

        2. I’m not talking about now. Plenty are already preparing to sue for the displacement of fry cooks by robots. No, I meant historical displacement. If not me, who will speak for the flint-spearhead maker? The toga dyer? The conquistador?

          1. Conquistador had an awsome severence package, don’t weep for them (you may want to do so for those within their ecomendecia).

            As for flint knapping, that wasn’t a separate profession.

            And the textile industry spawned the luddites, so they can speak for themselves.

            1. Casually dismissing the rights of my clients means we’re also tossing in hedonic damages.

              1. Your clients have waited too long to file, and were not covered by this jurisdiction. You will be paying us by the time this case gets laughed out.

                1. Reparations are about social justice, not hindered by quaint oppressive laws like statutes of limitations.

                2. You’ll stop laughing when his clients show up in court, armored and bearing matchlock guns!

                  1. Yep, grandfathered in.

          2. ^shill for Big Conquistador

      2. Perhaps 40 acres and a mule?

        1. Sure. With the dollar value multiplied by a reasonable annual interest rate, say 10%.

    2. Google: Bettie Page Whip

      You’re not going to trick me into having that in my search history!

      1. Don’t matter none. You’ve already linked yourself to it for all eternity.

  4. The things is, taxi service beyond a 5-mile radius of the CBD absolutely sucks. This is the greatest benefit Uber/Lyft provide – neighborhood people willing to give rides to/from other non-CBD neighborhoods because the lack of a taxi medallion makes such rides economically viable. When the medallions cost 250K, the rides MUST either terminate in the high-rent districts or be 15+ miles, otherwise the medallion owners can’t afford to give the rides.

  5. Oh noes. I feel almost as bad as I do for those fallen whale oil magnates

    1. Fucking magnates – how do they work?

      1. Your fucking fingers — how do they work?

        1. JINX!

      2. To answer both of you, mostly through servants and other factotums.

    2. Fucking whale oil magnates, how do they work?

      *** bites lip ***

      1. that is fucking AWESOME

  6. betting on the arc of government bending ever toward bigness

    That’s some perfectly cromulent phrasing.

    1. I’m betting on the “arc of government” to bend us all over, if it hasn’t already.

  7. On my last Uber ride, I had a young civil engineer on the way out and a Mexican veterinarian who hadn’t yet managed to get his credentials recognized in America. Both nice guys. Way better than surly taxi drivers. Hell, when I lived in Tallahassee, if you weren’t getting a can from Tennessee street, you could forget it. And I saw a friend ranting about the same thing last week.

    1. I had an opera singer drive me one time. That’s half the fun. The drivers usually have interesting stories.

  8. I’m calling BS on the alt text…unless that’s not a ROADZ

  9. OT: On C-SPAN2 I just heard John Roth use the phrase “Office of Integrity for the Secret Service”

    1. I’m sure its and Orwellian department that actually schedules the hookers and runs interference on DUIs

      1. Ahem. DUI through an “active bomb investigation”.

        Their definition, not mine. To me, “active bomb investigation” means they actually found a bomb.

  10. Taxi drivers are just the unluckiest people. First off, their credit card machine is ALWAYS broken, and now this? Cut these guys a break!

    1. Seriously. The last time a guy told me that, I gave him this look and he said “This time it really IS broken.”

  11. I started with my online business I earn $58 every 15 minutes. It sounds unbelievable but you wont forgive yourself if you don’t check it out.
    For information check this site. ?????

  12. Government protects a special interest until it doesn’t. Then what would have occurred over decades happens in a few short years or less. Just ask the former small farmers of a couple of decades ago.

  13. My last ride in a taxi was heading out of LAX. It states right on their window that there is a flat fee if you are going from LAX to Downtown. I get to my location and he tries to charge me full fare. Since it only took me repeating myself 4 times about the posted rates, this still qualifies as my best taxi experience in the last two years. Uber drivers just have better service, even at their lowest tiers and wait times are much better if you aren’t near a place that is near a taxi line.

  14. Karczewski inherited this medallion, this piece of metal (or paper?) that permitted him to be one of just 7,000 licensed taxi drivers in a city of 2.7 million. Sounds very caste-systemish[…]

    Indeed, it sounds a lot like buying a title of nobility. You can imagine the scores of taxi medallion-holders betting on the staying power of the “bigger fool” paradigm. Of course, they count on the government to keep their monopoly with fierce conviction but, in the end, even the best-motivated defenders of the most formidable stronghold succumb to reality (or hunger.)

  15. Under the proposal, the smartphone app operators [local taxi companies] would be required to approval before modifying their apps or face fines?a regulation that a powerful coalition of Silicon Valley companies told New York City Mayor Bill de Blasio would stifle innovation.

    We are the Judean People’s Front crack suicide squad! Suicide squad, attack!

  16. Prices in artificially contrived markets are artificial. Who knew?

    Let’s talk carbon markets!

    1. Carbon Markets? Can I get four tons of coal?

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