Back in July we talked about the fact that ride hailing services such as Uber and Lyft had decimated the value of New York City taxi medallions to the point where taxi supporting credit unions were in danger of going under. For those who aren’t familiar with this scam, back in the early days of public transportation the municipal government teamed up with the taxi companies and their unions to find a way to stifle competition and take care of the industry and union reps who donate very generously to the political campaigns of the powers that be. Their solution was to institute a system of “medallions” which were required to legally operate a taxi inside the city.
This scheme limited the number of taxis which could be on the road. But with the artificial limit placed on the number of medallions issued, they also immediately created a marketplace for the medallions. (Since only the government could issue them it was a pretty sweet deal.) The medallions were able to be traded, so the value of these completely artificial instruments shot up into the millions of dollars, further locking out any competition from individual drivers and smaller companies hoping to get into the game. So valuable were they that the credit unions began allowing the cabbies to borrow against their value for mortgages, home improvement loans or whatever. Once Uber and Lyft finally came along, the value of the medallions plummeted to close to their real world value… nothing.
Now the cab companies and the unions are up in arms and they’re demanding that the municipal government “do something” about it. And in true New York City Democratic Party style, it looks like they’re going to. (CBS New York, emphasis added)
Yellow cab drivers say their industry is in crisis and want the city to help them out.
“In the charter it says the city is responsible for the financial stability of the medallion. Well, follow the rules” Taxi Medallion Owners and Drivers Association spokesman Richard Lipsky said.
The city’s transportation committee said it may now create a task force to come up with specific ways to help cab drivers.
Cab drivers want the city to impose higher licensing fees on their rivals, and possibly impose restrictions on where they can go.
They also want a cap on how many ride-share apps there are in general.
“You can’t compete with somebody who has an unlimited amount of cars, when you’re capped at 13,000,” Lipsky said.
What’s going on here is an indication that some “corrective action” is about to be taken by the New York City Transportation Committee. This august, 12 member body runs everything to do with public transportation in the Big Apple and is composed of… twelve Democrats. (I’m not even kidding. Here, go check it out for yourselves. We’ll wait right here.)
One of the reasons that the entire cab situation in New York was so awful was the absolute lack of competition and the corrupt nature of the medallion system. The arrival of ride sharing services finally broke the choke hold they held on the system, but now the municipal government is going to leap into action. And look at what they plan on “fixing” in the process.
Their stated purpose in this mission is, “to help cab drivers.” Excuse me, but what happened to the fair market? It’s bad enough that you tried everything in your power to ban ride hailing for years, but are you going to officially do something to pick one set of private industry actors over another? Picking winners and losers in the business world always works out so well for the government. This is, frankly, obscene.
Assuming they give in to the demands of the cab companies and the unions they will be imposing higher fees on ride sharing. So two different outfits performing essentially the same service will be charged different fees? Oh, yeah. That sounds fair. And you might be placing an artificial limit on how many ride sharing app users there can be? Excuse me, but that’s just the medallion system all over again. It’s how we got this mess in the first place.
This needs to be broadly exposed to the public before this Gang of 12 can do any more damage. And in this rare case, it’s a fight that the Democrats may actually lose. The reason is the same as the explanation as to how Uber and Lyft got into the city in the first place. People like Uber. They like having options and choices and better service through competition. And that includes liberals and Democrats. If you try to cut out ride sharing your own base will be running you out of town.
This is blatant corruption and the undermining of competition, and it’s being done right out in public. These people have no shame and need to be removed from office if they actually attempt this.