Yikes- I have only a little sympathy for the taxi industry, but it is very scary that you do not believe we should be concerned with whether market forces improve society or not. I think it is extremely important to the vast majority of people that any enormous change in transportation occurs for the benefit of society - the ideology that capitalism is an end into itself is extreme and fringe, and we shouldn't be afraid to call it out as such.

I live in Chicago, and I don't know if Lyft and Uber are a social good, but taxis were too expensive for me, and now I have another affordable option for transportation. Plus all of the drivers I've spoken to seem pretty happy with their new source of income, so it's mostly the city and medallion owners that are losing out. The city can take action to help ease medallion owners out of the industry without defaulting as the demand continues to decline, and drivers are completely qualified for the ride-share industry. As far as disruptions go, this one seems pretty agreeable (I don't have much sympathy for the bureaucrats who are stuck between raising taxes and rooting out corruption and mismanagement in order to make up the difference).

Market forces are naturally driven by customer demand and the realities of supply costs. Government intervention/subsidies is the only thing that interferes with that process, and almost always that intervention is being driven by self interested actors looking to reap above market profits.

You may not like what customers want, but that doesn't mean it's not better for them.

I don't want - Drivers that drive like maniacs. Drivers that spend the entire ride on a phone call to god knows where. Drivers who lie to me and tell me they can't accept my credit card.

However, it seems to be conflated that the alternative to that can only be people using their private cars that don't necessarily know the area they're driving in and are by no means professional drivers working in an ill-defined "non-employee"/Employer relationship with Uber.

For what it's worth, in New York, that's not your problem if they tell you at the end of the ride. By law, if a card reader is broken, they must inform you of this at the beginning. None of this "ok, I take you to ATM" business that tacks on a few more bucks onto the meter.

People always claim this will happen, and it never seems to. If Uber tripled prices, a competitor would start up to cut into their market share.

Due to Uber's network effects you could say they'd have even greater power to change prices dramatically. Let's say Uber became the dominant transportation network in a particular geography and then trebled prices. Any new competitor has to both lure riders and drivers from Uber. Riders, sure they can be lured by cheaper travel but drivers want to earn the most money. Uber could simply double how much they paid drivers. All the existing drivers (and any new drivers) would rather work for Uber and get paid more. In fact they would have a vested interest in seeing the competitor fail.

1: https://en.wikipedia.org/wiki/Phoebus_cartel

2: https://en.wikipedia.org/wiki/Bell_System#Nationwide_monopol...

3: https://en.wikipedia.org/wiki/General_Motors_streetcar_consp...

Bell System ended up being heavily regulated, and it's service was second to none. It was nearly a natural monopoly because of the cost of running phone lines. If Uber ever became that, we could resolve any problems with regulation.

But in reality Uber can never become a natural monopoly, entry into their market is too easy and just gets easier over time as costs decline for systems development/operation.

What will happen if they succeed is that Uber will become a valuable brand, people will prefer it, and other competitors will be forced to compete solely on price. So far brand building is something Uber is struggling with.

I think it's unlikely that the current political climate will allow such problems to be solved with regulation.

Politics is politics. I was just re-listening to Dan Carlin's podcast series on the fall of Rome. He starts with the Graccus brothers, who were populists. Rome had an elitist power structure, basically the founding families controlled the senate, with the Equestrians and Plebes below them (and slaves below that).

The Graccus brothers got themselves elected Tribunes, which were roles intended to check the power of the senate, and took those roles to push forward land and other reforms to check the power of the senate and give things to the middle class and poor (some would say to buy the mob).

To stop this, the Senate at one point recruited their own Tribune candidate, and he didn't promise to rollback the Graccus reforms, in fact he did the opposite. Instead of giving away land for cheap prices to the Plebes, he offered them free land. He offered even more bread subsidies, and instead of the state paying for a foreign colony for the plebes, he offered to pay for 12 of them. And he got elected to replace Gaius Gracchus.

All politicians are sensitive to where the wind is blowing and most try to take advantage from it.

There's some truth to that: whenever I bother to check I find that Amazon is no longer price-competitive with brick-and-mortar.

> If Uber tripled prices, a competitor would start up to cut into their market share.

...unless there's no actual profit at anything less than 3x the current prices. Isn't Uber running on a VC subsidy right now?

3x the current prices would put us at roughly what taking the cab looked at before Uber cost-wise.

I'm not concerned with the price of rides increasing, I'm concerned with the unemployment our country is going to get punched in the face with. Between cab drivers and OTR (truckers), we're going to have a MUCH bigger problem on our hands than we've seen since Detroit collapsed (which was arguably less of an issue since it occurred over a longer period of time).

Uber will run out of money long before we have self-driving cars.

As for "at their home" - if you think that the cross section of elderly people who:

Can't lift their bag into a car.

Travel frequently.

Have no friends or family to help.

Have no neighbors to help.

Don't live in assisted living.

Is enough to sustain the industry, I think you're in for a rude awakening.

This is a very good point. Also consider that many more people need help with groceries than with luggage.

Heck, with amazon groceries and other similar services, why do they even need to go to the store?

Self-driving would take away a big chunk of that market, but estimates vary on when that becomes a reality. With every major technology improvement, there were massive employment and social shifts. Wars and revolutions were often side effects. However, I don't think the percentage of the population engaged in the taxicab and trucking industries are enough to destabilize society. By its nature, the employees in that business are often transitory. Perhaps there will be legislation to force self-driving vehicles such as taxicabs and commercial trucks to keep a human "driver" to supervise and assist when the vehicle gets into situations outside of its programming.

Uber's service costs pennies per ride to provide, drivers pay them dollars per ride to participate. There is almost no chance Uber can't be profitable at current prices. The only question is whether prices need to rise to ensure a decent supply of drivers.

Also public transit, car rentals, etc.

Car rental because you have to pick up the car and later drop it off and the costs are significantly higher than a taxi, and public transportation because it's slower, more crowded (therefore more difficult with luggage) and doesn't always go directly where you want to go.

On a city-wide scale you can't expect car rentals and public transportation to be a valid replacement for a taxi/taxi-like service.

I love that I live in one of the few cities with a train that leaves directly from the airport.

(I now wonder how many others I don't know about from personal experience!)

> and who do you think is paying for your cheap Lyft trips?

Mostly my own contribution, and partially VC money.

1. http://www.cnbc.com/2017/01/12/pipsqueak-lyft-could-reach-pr...

Answer is they provide great rates for passengers - see all of the anecdotal evidence here - and great pay for drivers.

It literally is "too good to be true."

It's just an app--with a $20B valuation and about as much in free cash.

My guess is they are spending a lot of money expanding. Once done, they will be instantly profitable.

The genie is out of the bottle.

Except pharma, telecom, energy, airlines and one or two others...

I am not sure who would like taxi industry to pharma?

There's a lot of people who would disagree with you. They are called libertarians. What matters first and foremost is freedom - individual freedoms should not be overridden for the sake of improving society.

Similarly, easements don't go away when they change buyers. For example, if you own a landlocked property, and you have an easement with your neighbor that allows you to drive across his property on his private road to reach yours, and then the neighbor sells his property, you can still use that road - the new owner cannot say "tough luck."

All that's going on here is that cabbies made a bad investment and are losing. Sorry, but if you're tying up 90% of your wealth in a single asset, the value of which is 100% dependent on fickle regulation, and you didn't see this coming a few years ago, I don't have much sympathy. No prudent financial adviser would recommend this, and further, if you were so exposed, you should've been paying attention to what's happened in the industry over the past, I don't know, 8 years?

Pretty much any actual customers of ride-sharing services such as Uber and Lyft have already answered that question adequately for themselves. No one else's opinion -- not yours, not mine, and damned sure not the taxi cartel's -- is of any importance.

That doesn't mean there aren't risks, of course, especially for those who think the cheap rides are going to last forever. If government has a legitimate role here, it will come into play when the VCs get tired of subsidizing said Uber and Lyft customers. The taxi medallion business may be dead, but it won't be buried for good until the ride-sharing industry is genuinely self-sustaining.

(Does Chicago buy back the medallions, or do you have to have to sell them to someone else? Is the 300,000 the market value he paid to someone else, or is that what the city charges?)

The US government bailed out the banks in 2008, and all those people at the top got to keep their millions while so many people lost their homes (mostly due to fraud). These people watched their industry change while being locked into a sinking ship .. unable to do anything about it. These people need a bailout.

These kinds of markets have some interesting dynamics - carbon credits have similar issues. Basically, the government can set the initial price (because they artificially create the entire supply) but then the market takes over. It's very difficult for the government to set the initial price correctly (i.e., close to the eventual market price)

I seriously doubt that there's an easy mechanism for cabbies to get the city to pay the pre-uber market price for their medallions. They would probably have to sue, claiming that the medallion gave them a guaranteed monopoly that the government failed to uphold. That will turn on exactly what rights the medallion is supposed to entail.

The fact that medallions, which originally cost far less than $300,000, shot up to that price is solely because of the money they allowed you to grift from chicagos citizens. Now you think those citizens should be punished again to pay more taxes in order to redeem the speculators medallions at their highest historical price?

My guess is that if medallions changed hands at $300K, that meant that they could be leased out to cabbies for over $30K a year. That's the monopoly profits the system created for them.

We never should have bailed out the banks without much harsher terms. But politicians were worried about financial collapse. There is no worry about that here, this is objectively good for the economy and the country.

That's the thing though, they don't. And why would they? These cabbies made a bet that the medallion would not lose value until they sold it, and they lost that bet. How is this different from any other small-time business going bankrupt?

The analogy holds: A city government had a system where a good had artificial scarcity and intrinsic value from stable government policy. Then, it suddenly changed. I'm all for ride-hailing changing our public transit dynamic, but I can't fault the players of the old system too much for saying "What the hell about my retirement, my end of life?"

The fact that medallions, which originally cost far less than $300,000, shot up to that price is solely because of the money they allowed you to grift from chicagos citizens. Now you think those citizens should be punished again to pay more taxes in order to redeem the speculators medallions at their highest historical price?

My guess is that if medallions changed hands at $300K, that meant that they could be leased out to cabbies for over $30K a year. That's the monopoly profits the system created for them.

We never should have bailed out the banks without much harsher terms. But politicians were worried about financial collapse. There is no worry about that here, this is objectively good for the economy and the country.

Uber and Lyft rides are also investor subsidized, and that is likewise market distorting.

The city of Chicago, like many other cities, simply doesn't know what to do. They lacked the knowledge and/or the courage to either regulate Uber and Lyft etc just like taxis; or end the taxi monopoly and take some role with handling the total collapse of the medallion market (partial buy back perhaps).

But any of these meallion owners should investigate a hair cut negotiation with their lenders or talk to a bankruptcy attorney. There is no good reason for these people to be in debt on a useless asset. It's every bit as much their mistake to loan, as it was the lenders mistake to lend.

The only difference between uber and these other car services was the ease at finding a car.

Medallions owners ripped off people in Chicago long enough. They should sow what they reaped.

The medallions give "the exclusive right to pick up passengers who hail them on the street". But that's just happening as much. But even "the elderly" are likely not going outside (in Chicago) and sticking their hand out. They're being dispatched, where you wouldn't need a medallion in the first place (right?).

They are. There are many active elderly people in Chicago.

http://pix11.com/2017/06/07/nyc-taxi-king-accused-of-failing...

Now some medallion owners are trying to get gov't money to bail them out:

https://www.scribd.com/document/346690906/Letter-to-Governor...

Well, ~10,000 people, mostly male, are going to be left not only unemployed, but heavily indebted. That combination cannot be good for social stability. If you are a resident of Chicago, you should care. This problem won't go quietly into the night.

> The government in no way insured that medallions would be a winning business investment.

People who recently took out loans to purchase a car to work for Uber are going to be facing the exact same problem if and when they roll out their autonomous fleet. That's around 200,000 nationwide.

I care about these things because I want the society I live in to continue to be relatively peaceful. And America is certainly well equipped, there are as many guns are there are people. Situations like these are how bloody revolutions start. Everyone has fears about AI's running amok. I fear what people will do when AI's take their jobs.

But it's not 10,000 people. Lots of those medallions are owned by businesses, and they leased the medallions to drivers. Most drivers can switch to Uber/Lyft if they have or want to buy their own cars, or get other jobs. Driving a cab wasn't lucrative, the owners of the medallions were the ones reaping the monopoly profits.

The best part of the shattering of these monopolies was the lesson it gives others investing in government shielded businesses. Hopefully they will fear their own bankruptcies soon.

> Most drivers can switch to Uber/Lyft if they have or want to buy their own cars, or get other jobs.

Although some of them can probably use their primary car for Uber/Lyft, many of them will have to take out a loan/increase their debt to get a car they can use for ride-hailing. Perhaps you aren't aware, but losses in sub-prime auto loans have reached their highest levels since the 2008 financial crisis. Given that taxi drivers make on avg about $35,000, it's safe to assume that many only qualify for subprime and will add to this problem. And this is happening all across the country.

To your other point, get another job: Doubtlessly some people will be able to retrain. Just as surely, a number of people will not be able to adapt. Being a driver is about as low skilled as labor gets, so there are hardly any where their previous experience can transfer. So what jobs? Retail

> Driving a cab wasn't lucrative, the owners of the medallions were the ones reaping the monopoly profits. The best part of the shattering of these monopolies was the lesson it gives others investing in government shielded businesses.

I don't really care about the superiority of dynamic startups vs government shielded monopolies and honestly I think the financialization/commodification of parts of the economy such that people make bets on things instead of contributing productive value is not a good thing. But I digress, I'm more concerned with the shattered pieces left over in the creative destruction. 9500 formerly employed people with little future job prospects. That is .2% of working adults. It's not a huge amount, but it's not a drop in the bucket, especiallly when the city is again raising taxes and these individuals are going to need government assistance.

As us in the tech industry innovate and move forward, we aren't following the patterns of the past. When software eats industries, it destroys jobs a magnitude more than it creates. Let's be clear, coal isn't coming back and neither is manufacturing (BTW, the US is still the world's 2nd largest manufacturer and the leading advanced manufacturer, a fact that goes unnoticed) I personally don't find meaning or validation in life by having a job, but many do and UBI is a stopgap at best, but we really don't have any other solution at this point. That's what scares me....and people making rhetorical, ideological rants with no regards for facts.

[0] https://en.wikipedia.org/wiki/Taxicabs_of_the_United_States#...

[1] http://www.chicagotribune.com/news/ct-chicago-taxi-driver-de...

Subprime is less than 20% of car loans, because it's easy to get a car loan if you have good (decent, not great) credit. Car loans are relatively safe because they are collateralized. This is why my bank is offering new and used car loans at 1.99%, and manufacturers/dealers can offer even lower rates. Even with poor credit you can get loans for less than 10%, which is fantastic by historical standards.

Even for the drivers who have terrible credit they can get still get a subprime loan and keep driving. Even at absolute worst case 20%, that's $6,000 a year, about $3/hour for a $30k car being used full time for Lift/Uber. Leasing a cab from a medallion holder for one shift a day probably cost close to $10,000 a year. In the case of the sub-prime loan you can refinance when your credit improves or pay it off over time. The Medallion lease costs were forever. And the driver likely can get higher utilization with Uber and Lyft than they ever got with their cabs, so they should be able to make more money.

If the cab business becomes a free-for-all, there will be no one waiting at the airport at 3:00 AM. Granted, there isn't a lot of traffic at certain times, but the public interest is best served when there are always cabs available.

However, for this scenario, why does a cab company need to take on this risk? Why is the risk of not having a cab at a cheap price not borne by the person who needs it at 3AM? This seems like a problem that is sufficiently solved by the market, where cabs will charge appropriate pricing to make it worth their while, and if another company finds they can correctly price their fares so that they can offer the same pricing day and night, then customers will choose them.

>What prevented someone from operating a for profit ride program even before Uber without a medallion?

Nothing and lots of companies do it.

Uber scaled fast while ignoring local regulations. Both parts are important. We've seen from e.g. Zenefits [1] that state regulators are powerful. Local regulators, on the other hand, are slower moving.

Previously, a disruptor might assemble a few happy customers before the regulators slammed down on them. Uber's ability and willingness to scale fast changed that. By the time the local regulators were ready to slam down, entire cities of constituents wanted and liked the service. That changed the political calculus. Uber, and consumers, won.

[1] https://venturebeat.com/2017/04/11/zenefits-fined-1-2-millio...

It's the last two paragraphs of the article.

Uber generally broke car service laws by not requiring their drivers to have the local registrations.

I guess it matters to those upon which the worse is imposed.

By that, I mean not only the taxi drivers. From an individual standpoint, those who get to drive for Uber are happy to get jobs, but looking at the problem at the scale of the workforce, replacing one jobless man and one well-paid man by one less paid man and a jobless man is a net loss.

If you see a taxi company as some kind of employer of last resort or an unemployment benefit without the shame, then perhaps it's a net loss, but why not just call a benefit a benefit and hand out cash to un/underemployed people. If you have to take a pound of flesh to prevent abuse, then have them break rocks or something to earn their payments.