> "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 say, "it's dishonest to pretend that regulation is strictly driven by parasitic behavior," but I was just quoting directly from the nyc.gov site that explains that's exactly why those regulations came to be.

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.

> "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.

> it was protecting an existing industry from competition

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.

>Otherwise known as "keeping people employed at a living wage."

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.

You can also spin this as "keeping people who need a ride poor by raising the price of the good they depend on", or even "preventing the poor from working by making it uneconomical for them to get to work".

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.

In many of these cities, it is impossible to flag a cab at any price during peak hours. It would be far more efficient for the government to top up the earnings of low-earners than to manipulate the supply of cabs.

> 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.

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

If they lower fares by not getting insurance and not maintaining their vehicles it's probably a bad thing.

Wouldn't requiring them to carry insurance and maintain their vehicles still be better than government-granted monopolies?

Yes, but it's considerably harder to enforce.

The medallion is what puts teeth on the enforcement of those rules. It's very easy for the owner of a fly-by-night cab company to get new drivers back on the street, perhaps operating under a wholly new LLC with new livery. It's not easy for that owner to get new medallions.

That's just treating the medallion as a deposit. If that's the point then why not use an actual deposit and not artificially limit the number that are issued? Or just treat the cab itself as collateral and seize it for any violation that would have caused forfeiture of a medallion? It may not be worth several hundred thousand dollars, but it's certainly worth enough to have to take it seriously.

see: Fung Wah buses on the East Coast

Regardless of origins, I think there's still an important role for city governments to manage the number of cars on the street. NPR Planet Money did a story about the effect of NYC's planned +2,000 cabs (in additional to the existing 13,200) will have on the city: shorter wait times, but longer drive times for everyone. If the story is correct, more deregulation with more cars on the street without other measures (such as congestion pricing) would be bad for the public. NYC traffic is already bad enough.

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

This is why it's so annoying that Albany vetoed the congestion pricing plan. Congestion pricing would keep vehicle traffic down to acceptable levels without discriminating based on type of vehicle.

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.

It's far from obvious that demand has outstripped supply. The population of Manhattan was significantly higher in 1937 than it is now 1.9 million vs. 1.6 million. On a population basis it would seem that we would need fewer rather than more cabs.

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.

> It's far from obvious that demand has outstripped supply. The population of Manhattan was significantly higher in 1937 than it is now 1.9 million vs. 1.6 million. On a population basis it would seem that we would need fewer rather than more cabs.

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.

You miss the point -- it's not about the number -- it's about the change since 1937. No where in the reference you provide is there any evidence that this number has grown since 1937.

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"

Has the relative income of the residents changed since then? I.e. if the average income in 1937 was on par with the national average and now its 200x that, perhaps there's greater demand for a luxury service such as cabs from a greater slice of the population.

> Many New Yorkers then worked six days a week and many of today’s free-transfer points required a second fare.

What I don't get is why a city as dense as NYC supports any transportation method that puts a few individuals above the public good. Cars in a dense urban area epitomize the tragedy of the commons. Buses and delivery trucks are the only vehicles that must have access to the street. Everyone else should be walking, taking public transportation, or bicycling.

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.

Taxis are not the problem. Private cars are the problem, and the city does a pretty good job keeping them out of Manhattan as well, with tolls on many of the bridges (any bridge into Manhattan connected to a highway is tolled; local street bridges are not) and a 19% parking tax.

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.

I would love to see a city mandate something the size of the Lit Motors vehicle for the cases you mentioned. However for many of the cases you mentioned, taxis still aren't the solution. There are plenty of families and handicapped people that get by with public transportation. They can use things such as scooters, wheelchairs, motorized wheelchairs and strollers. Technology has advanced to the point where a motorized wheelchair or scooter is no longer a rare luxury.

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.

> What I don't get is why a city as dense as NYC supports any transportation method that puts a few individuals above the public good.

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's a solution for that. Grand Central Station. Thousands upon thousands of people commute to NYC by train everyday, leaving their cars at the suburban train station parking lot.

You really can't compare the use-per-capita of cabs between 1937 and 2013...

Why not? An ellipsis isn't an argument.

I thought calling attention to it would be enough. Life, wealth distribution, transportation modes, etc. are very different now than they were 80 years ago. Treating it as a roughly apples to apples comparison is ludicrous.

Are you suggesting that there will be not be an increase in the number of cabs in NYC if more medallions are opened up?

I'm not sure why it matters what the original impetus behind medallions was. Maybe that means we should have a different regulatory regime more suited to ensuring that every resident of a major metro area has access to safe, efficient taxi transport and less suited towards ensuring a living wage for cab drivers. That's fine. But it's not an argument for no regulation at all.

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

As you wrote: "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."

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

Why would you say that it would lead to market failure? It would have led to more cabs, lower fares, and more jobs (albeit at lower wages).

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.

"but that's not why taxi's were regulated, at least in New York."

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.

I'm just gonna throw this out there, "underhanded tactics" in the depression era were probably quite a bit more underhanded (no scare quotes) than undercutting the competition on price.