http://www.nyc.gov/html/media/totweb/taxioftomorrow_history_...

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quoting from the NYC site:

"Widespread poverty prompted many New Yorkers to opt for less-expensive forms of transportation, decreasing the demand for taxis. This put many companies out of business and caused many cabdrivers to lose their jobs. The situation was made worse by the tactics of “wildcat” (unlicensed) taxis who used what some considered to be “underhanded tactics,” such as drastically lowering fares, to get more business."

Lower fares is not the only consequence of this type of free market. In NYC we've seen a rise of intercity buses competing at cut-rate prices, and one such bus company recently and spectacularly failed every single safety inspection performed on their vehicles. They also have an accident rate several times that of their less price-sensitive consumers (Greyhound, Amtrak, etc).

Free markets often have substantial downsides, it's dishonest to pretend that regulation is strictly driven by parasitic behavior. There are also substantial upsides to commoditization - i.e., gains in efficiency when every consumer does not have to engage in complex analysis of the product on every sale. There is a loss of market confidence when you have to go through a mound of paperwork just to determine which intercity bus line is safe to ride.

When a market is over-regulated, such regulation often have legitimate and still-relevant roots. Those who cry for complete deregulation would be wise to figure them out first. Regulations may run amok, but they very often still sit on top of a legitimate need.

You can argue separately for safety regulations, but that's not why NY started to regulate cabs - it was protecting an existing industry from competition. Also, put yourself in the 1935 mindset - was there even auto insurances? were there seat belts? The risk profile people lived with was much different.

Indeed, and that's precisely the start of much industry regulation. Not just taxis, but railways, boats, and all other forms of shared transport. Transportation safety was a Big Deal in the early 20th century, and the market did differentiate itself on that point - but there was also little regulation or oversight to ensure that claims of improved safety were actually real (see the most infamous example in the Titanic).

Mandated seat belts, car insurance, brake mechanisms (e.g., trains), speeds, inspections. All of these were borne out of necessity. The lack of safety in the 1935-life is why we are living with so many regulations today.

Our history seems to go: new technology, a lot of people are killed by new technology, regulation to improve safety of technology.

The "let's deregulate everything!" angle is just winding back the clock. To before the regulations became onerous and excessive, but also to before the regulations saved a lot of lives.

Otherwise known as "keeping people employed at a living wage." When the market decides that human labor is worth nothing, it's irresponsible not to contradict it.

I will agree that medallions should have gone away after the crisis, but it wasn't "parasitic" at the time.

Or, stated differently, keeping some people employed at above-market wages and others unemployed with no wages at all.

>When the market decides that human labor is worth nothing, it's irresponsible not to contradict it.

If that ever happens we'll know regulation is needed.

If you're going to argue in favor of breaking competition, you absolutely have to have a better argument than "it's good for the sellers." There's two sides to every economic transaction, and I see no evidence that cab-medallion-owners are drastically more worthy people than cab-riders.

Lowering fares to get more business? Oh my. What good could possibly come of such a thing.

http://www.npr.org/blogs/money/2012/07/31/157477611/does-new...

Still though it should be recognized that the medallion system leads to massive returns for a tiny minority of existing medallion holders who are basically just extracting rents. The system could have easily been set up so as to distribute the returns to riders, or drivers, or taxpayers.

What drives the demand for cabs is the the price of a ride versus the alternative. If the regulated fare is low relative to subways & buses and the overall price level, cabs will be in high demand. If the fare is high, demand for cabs will decline.

Wrong population number, in the case of Manhattan where real estate prices are so high that 'number of people officially living there' becomes the wrong metric, and the right one begins to look like 'number of people physically present on the island each day', which is closer to 4 million people: http://wagner.nyu.edu/rudincenter/publications/dynamic_pop_m... (Significantly higher than 1.6 million!) And these commuters are also much more likely to need transportation - like taxis - for obvious reasons.

http://www.nypost.com/p/news/local/subways_on_roll_fDYxgwu92...

From the Apr 10th NY Post: "More than 1.65 billion straphangers used the system in 2012 — numbers that haven’t been seen since 1946 when ridership was more than 2 billion, according to MTA statistics released yesterday"

Not having to wait on a street corner for a crosswalk signal or only doing so sparingly would save NYCs on average more time than the occasional taxi ride. On top of that, the absence of cabs would set many minds on the problem of moving all New Yorkers around the city as fast as possible. If you're rich and you think that your time is valuable, then vote for spending on public transportation innovations that benefit everyone equally.

If you eliminate cars and time truck deliveries well, you can engineer a transportation system that runs like a well engineered clock with many complications. Cars are responsible for most of the non-detrminism in a public transportation system.

But there are certain situations where you need a taxi and the bus or subway won't do. Think the elderly, families with small children, etc.

While I can see the argument for taxies, I;m totally in agreement about private cars and especially parking. Parking has no business in the modern urban dense city.

Well, for one thing, NYC is answerable to NYS. Lots of people commute into NYC from its suburbs, they like to drive, and they do vote.

There may be a compelling argument for no regulation. I'm just saying, that's not it.

Protecting a critical industry from market failure is more than just "protecting employment"

BTW - if it wasn't clear, I didn't write that sentence. I copied and pasted it from the nyc.gov site I linked. I'll edit my post to make it more clear. But I think it important that the regulators themselves are being honest about why the regulations came to be.

Why does it matter why they were first regulated? It matters just as much why they keep being regulated because the reason can change or morph over time. And even if regulated for the wrong reasons it doesn't mean that in the end there aren't any benefits.

To be clear: a medallion system says, "In San Francisco, we will have 680 cabs, no more."

That is separate from the question of whether you license cab drivers or charge for the license.

You could say, "In order to drive a cab in this city, you must pass an area knowledge test, pass a more-onerous driving test, you must re-pass these tests every two years, and we will revoke your license if you're involved in an accident. And in order to defray the costs of administering this program, we will charge you $1,000 for that license. And you must use this pricing scheme for fares." But if you were willing to license every person who passes those tests and pays that fee, without regard for how many people have already passed the tests and paid the fee, you aren't operating a traditional medallion system.

If you want to regulate taxis, you can still do that - but there is no reason to limit the supply of taxis.

sure there is. here's a bunch of reasons: http://en.wikipedia.org/wiki/Market_failure

> there's no particular reason the free market can't provide such a service, but there's no guarantee that it will.

Still, I stand by my assertion that, in general, if such a service is legitimately valued and necessary, a provider will emerge. No, a free market does not guarantee an optimal outcome for every individual, not does it guarantee that well get what we wish for. But free markets are still generally better than non-free ones. Pointing out that there are pathologies in full fledged laissez-faire doesn't count for much, unless one contends - and can prove - that (one or more of) the other options has no pathologies of it's own.

https://news.ycombinator.com/item?id=1650659

Cities therefore have a powerful interest in making sure that whatever else happens, there is a strata of taxi service available to all residents of the city at some predictable rate.

Limiting the supply of taxes reduces the likelihood that this will occur.

Not that NY has anything like the "universal service" you are hinting at, taxes rarely go above 125th st.

But yeah, originations are a problem.

Source: http://www.nyc.gov/html/tlc/html/passenger/taxicab_rights.sh...

- good (safe, knowledgeable, rested) taxi drivers - taxis in good condition - a sufficient number of taxis on the road - a reasonable price to the customer - and a system to handle complaints

It seems to me that medallions actually fail on some of these points. Instead, it would be worthwhile to:

- license drivers, not medallions. Non-transferable right to operate. - license taxis with regular inspections - use technology to track cabs - have the city run a centralized, mostly web-and-touchtone based dispatch system - and adopt suitable regulations to avoid feast-or-famine at the airport, downtown, and that socio-economic region that the cabs tend to avoid

Which is exactly the model within which Uber et al operate: livery drivers and webapps.

The medallion system (like the car dealership system) is made to protect the incumbents. Period. There was no a priori argument that this was going to be good for the people of the city or that every citizen could expect a predictable rate and level of service. In fact, the complete opposite was true -- these regulations were born out of period with a glut of taxi labor and falling rates.

Making sure that taxis pick up in poor neighborhoods is an important, tough, and long standing problem. It would be disingenuous to argue that the "market" will fix it on it's own but then laws requiring cab drivers stop for all customers are routinely flouted, so it is not the case that regulation can fix this problem either.

The problem with supply limits is that once they are in place, everyone involved, other than the customers, has a vested interest in keeping the limits where they are for decades regardless of an increase in demand.

Startups, VC's and angels don't want to consider any points like that. They only care about how they can get a part of the pie (like any business.) VC and angels are business people who are motivate by profit (full disclosure: so am I). Startups are started by people who simply think everything from the old way of doing things is bad and needs to be overturned and not to trust anyone over 30 as the old saying went.

Along these lines I'm waiting for startups to try and "disrupt" the liquor control system (and liquor licenses) that are in place in various communities across the country for good reason even though legacy owners profit from that "restriction of supply" as well.

On the other hand, as we can plainly see, late-night permits and ABC licenses in California are a matter of open conflict between residential and commercial parties.

That's why uber exists and is highly profitable. Unregulated cabs at any price are better than regulated cabs that might as well not exist. And it doesn't hurt that uber has innovated on an industry that has been stagnant for a long time, like most regulated industries.