[throwaway1967]

> what is a unionized taxi driver to do in this kind of political and economic climate?

Do the moral thing and step-down from their monopolies, and embrace competition.

Why do you care about immoral people? Those who benefit from monopolies are not above robbers who benefit from a temporary monopoly on violence to bilk their victims.

EDIT: response to ishw (since my posts are being delayed):

The drivers that took credit in order to benefit from an immoral monopoly subsidized by tax-payers had it coming. Public libraries are available and anyone can learn where this road leads by picking up Economics in One Lesson which is eminently readable and widely available.

This is like saying "this gang of robbers paid the government X dollars backed by credit for the right to rob, and we can't put those robbers in a position of defaulting on their now-worthless license to rob". Uhm, yes we can, because the "medallion" they bought is precisely the instrument that makes it illegal for everyone else to compete with them. In other words, a criminal is not exempt from their crime just because they purchased the instrument, that enabled them to commit the crime, with credit.

When you say "Taking the moral highroad is not an option here", therefore, that's just a misinformed reaction to a situation that, as you correctly noted, allows for no way out that isn't harmful to one or both parties. Which is why this sort of engagement (monopolistic or monopsonistic) is to be discouraged and why only voluntary contracts should be enforced by Law.

EDIT: response to mbreese:

Wow... your response is a complete non-sequitur to what I said.

[ihsw]

The article mentions most medallions are backed by credit -- that would mean the drivers would be put in a position of defaulting on their now-worthless medallions. Such investments would destroy their financial prospects for the near future if not in the long term due to the exorbitant cost associated with holding medallions.

Taking the moral highroad is not an option here. It's easy to advocate the free market from afar, but not everybody is prepared to even begin participating in the free market due to being financially shackled.

I was going to suggest that Uber operate a program of financial assistance to taxi drivers looking to flee the credit-subsidized catastrophe bearing down on them in exchange for multi-year employment contracts, but the collective value of these medallions is estimated at $10 Billion. Yes, ten billion USD.

How would such a program work? Could it work?

[bcoates]

The drivers don't generally personally own the medallions. The medallions are owned by companies who mortgage them to banks. The medallion collapse means these companies almost certainly have negative value, and if the owner isn't making enough money from it they'll just walk away. The bank will then have to legally recognize what is already obvious (that the loan on the medallion will not be paid as agreed, and the collateral is worthless). The bank may have to call in insurance and some bank customers may take some losses. $10 billion isn't going to break the bank insurance industry.

What about the drivers? They've already been fired, that's why the cabs are sitting idle. There's no need to help the financial speculators.

[ruddct]

NYC-specific comment:

Taxi drivers don't typically own their medallions. Medallions are typically owned by medallion holding companies, which lease out their cars to drivers.

Very low interest rates fueled medallion companies to push the price of medallions higher and higher. Everyone was bidding for what they saw as a good with fixed-supply. Then Uber came along. Turns out they were wrong.

So who suffers? Banks that made bad loans and a small number of stagnant companies whose business models are now obsolete. Business as usual. The world keeps turning. Drivers will just shift to Uber or one of their myriad competitors.

Having Uber or the city bail out these banks/holding co's would be a little ridiculous. Let the businesses that made bad decisions deal with the consequences.

[aikah]

> The article mentions most medallions are backed by credit -- that would mean the drivers would be put in a position of defaulting on their now-worthless medallions.

A medallion buy-back is the only fair solution (for individuals, not for taxi companies). So there should be some kind of compensation so we can all get out of that system, system the local legislator created. But it shouldn't be up to Uber to pay, no matter how I dislike Uber, they didn't create the problem. The whole "free but paid because of scarcity" medallion fiasco is the real cost of corruption, and tax payers always foot the bill sooner or later in these case.

[mbreese]

Wow...

Competition is good, but it's not like taxis are an unregulated monopoly taking advantage of the populace. They are heavily regulated, mainly in terms of the prices that they can charge (in most areas). It's not like Uber is that much cheaper than a taxi, particularly when there is surge pricing.

I do find Uber more convenient than a taxi, but they aren't exactly competing on a level playing field.

[ClintEhrlich]

The very fact that medallions were being sold for hundreds of thousands of dollars demonstrates that taxi were, in fact, a monopoly taking advantage of the populous. Regulated monopolies are often even worse than unregulated ones, because the dominant entities were placed in that position through preferential treatment by the government, not as the result of prevailing over all their competitors in the marketplace.

The medallions became investment vehicles for hedge funds because they conferred the right to provide a service for which there was a very high demand and a supply that the government was capping at an absurdly low level, in a classic example of regulatory capture. When you had to wait forever for a taxi, it was because there weren't enough of them being operated. And there weren't enough of them being operated because only people with medallions were allowed to operate taxis.

Ridesharing apps have unmasked this glaring inefficiency and given people a look at how much more efficiently the world can be run when government regulators are circumvented by private enterprise. The state still has the power to ban this new mode of providing transportation, but that will likely be politically untenable, given the public popularity of Uber and Lyft. (There is still a risk of indirect state action, like unfavorable rulings about the employment status of Uber drivers)

The experience of the taxi companies will be a wake-up call to other heavily regulated legacy industries that if there are any signs that an app is going to disrupt their business model, they need to immediately try to block the app from the marketplace (e.g., by suing the makers to scare off VCs) Once customers get a taste of the techno-libertarian future, they aren't enthusiastic about returning to the drudgery of state control.

[humanrebar]

> They are heavily regulated

Regulations generally favor the incumbents. Don't believe me? Start a food truck in Manhattan.

I suppose you could argue that taxis are getting a raw deal now, even with the existing regulatory capture. I'd be receptive to arguments that certain taxi regulations are punitive or out of date.