What can we learn from the collapse of the taxi medallion shakedown?

From Jeff Jacoby on New York at Townhall:

A million bucks for a taxicab medallion? That may have come as a shock in 2011, but the price kept climbing. By 2014, medallions were going for $1.3 million apiece.

And all anyone got for forking over that astronomical sum was the government’s permission to operate a vehicle as a taxi for hire. They didn’t get a list of established customers. They didn’t get the right to ply a popular route. They didn’t even get a car.
The only reason anyone would pay a fortune for something so insubstantial is that the supply was capped by the government. More.

But due to social media, Uber and Lyft made the medallion a very poor investment: “Since 2014, the cost of a New York City taxi medallion has plunged. As CNBC reported the other day, some medallions sold in 2017 have gone for prices in the $200,000s.”

Had to happen. Real wealth lies in creating abundance, not scarcity.

Reality check: The taxi medallion demonstrates that government can make a product ridiculously valuable simply by making it scarce.