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This is a subject we have been discussing here for a while now. With the advent of Uber, Lyft and other large economy groups, a lot of pressure has been put on taxi drivers who do not offer a similar quality of service. The resulting economic distress is in part due to a simple lack of customers, but the problem is deeper than that. Under the traditional and corrupt system of "taxi medallions", the municipal government has been able to regulate the number of people able to make a living by offering walks. In return, they had to pay more and more money for one of these medallions. The government did create an artificial market for a product without real value because it controlled its scarcity.
The situation quickly became uncontrollable, the cost of medallions having exceeded the million dollars. This left the drivers (or their employers) in deep financial difficulties. When the economy of the show arrived, the value of the medallions dropped, causing the financial ruin of some drivers who committed suicide. But whose fault was it? The New York Times has published a thorough analysis of this phenomenon showing how government greed was destroying the livelihoods of these drivers while generating substantial profits. (The linked article is the second part of a series.) Read the first part of Times & # 39; report on "reckless loans" and damage to taxi drivers here.)
Despite years of warning signs, at least seven government agencies have done little to prevent the collapse, the New York Times found.
Instead, eager to profit from medallions or blinded by the political relations of the taxi industry, the agencies supposed to control his industry helped a small group of bankers and brokers reorganize it into a machine to earn money. money, according to internal records and interviews more than 50 former government employees.
For more than a decade, agencies have reduced surveillance of the taxi trade, exempted it from regulation, subsidized its operations and promoted its practices, records and interviews.
Their actions turned one of New York's best-known symbols – its yellow taxis – into a financial trap for thousands of immigrant drivers. According to an analysis of the Times' court records, more than 950 people filed for bankruptcy and many others struggle to stay afloat.
Although the Times at least stresses that dubious banking practices have contributed to the challenges drivers face, the story is deeper than that. Once it was established that you had to have a medallion to drive and that the medallions were suddenly worth huge sums (for no reason other than that dictated by the government), a market was created. The government had every interest in keeping the cost of the medallions as high as possible, even if they had no real value. So it was a system virtually immune to the recession. A cottage industry of credit unions has arisen, addressing almost exclusively to the drivers and allowing them to contract massive loans against the value of the medals.
Then Uber and Lyft came to town and the value of the medallions plunged. But no one was about to drop the drivers and the credit unions still wanted their pound of flesh. That brings us to where we are today.
So who buried the taxi drivers financially? Uber and Lyft, the credit unions or the municipal government that built this sliding system in the first place? We report, you decide.
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