Taxi medallion markets collapse across America

Uber may be rapacious, exploitative corporate scum, but they're knocking the bottom out of one of the most corrupt "markets" in the country.

In theory, taxi medallions -- which give the bearer the right to use a certified car as a taxi -- are a means of regulating the number of vehicles on the road, which has many legitimate dimensions. In practice, the medallions are often owned by rentiers, speculators who extract fees from actual drivers, while adding no value to the system. They win, and everyone else -- drivers, passengers and cities -- lose.

For a long time, NYC medallions had a better return than gold, oil or real-estate, all extracted from the labor of drivers without any contribution from the owners. A medallion was worth money even if its owner didn't supply, insure, operate or finance the car or insure or train the driver. It was a means of pure rent-extraction by absentee landlords.

Uber's labor practices are deplorable, and the company uses rhetoric about "disrupting inefficient markets" as cover for some really evil behavior. But the reason the rhetoric rings so true is that municipal taxi licensing is a disaster, and it's one that was deliberately made and continued for decades thanks to the great wealth the dysfunction brought to a tiny minority, who made so much that they were able to set some of their gains aside to lobby to make things stay the same.

In other words, Uber's identified a real problem, and what they're doing is fixing parts of that problem, but they're also making new problems. They're bad guys, but some of what they're doing is good.

Earlier this month, the Philadelphia Parking Authority, which regulates the city's taxi industry, had sold newly-created medallions for wheel-chair accessible taxis for $80,000 each. The bargain price came after the authority put the medallions on the market last fall, with an initial asking price of $475,000, but received no bids.

In New York, taxi mogul Evgeny Friedman is locked in a court battle with Citibank, to whom he owes some $31 million after some medallion loans matured.

Citibank is looking to seize 87 of Freidman's 900 medallions in New York, which has seen medallion prices drop to about $870,000 last fall from a peak of about $1.2 million last spring. Freidman, the biggest medallion owner in the USA, also owns fleets in Boston, Chicago, New Orleans, and Philadelphia.

Once a sure bet, taxi medallions becoming unsellable [Aamer Madhani/USA Today]