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.

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  • Maurice Miner

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

    Yes. Well said!

    Just think of residential land – the cost to build a house has remained fairly constant for the last decade (apart from “sustainable” energy requirements for solar, and similar boondoggles).

    The cost of the LAND has gone up, because the Government reaps an on-going revenue stream from the “cost” of the land, and Government zoning laws intrinsically make residential land “scarce”.

    When will the peeps wake up?

  • Maxsteele

    This is incorrect. Although the effect is scarcity the root cause is creating barriers to entry into a market. It is the artificial government barriers in markets that create monopolies and scarcity to keep prices artificially high.

  • terrence22

    Well, $10 in 1937 had the purchasing power of about $175 in 2017. But it is still a ridiculous increase. The $1.05 million also contributes to the increase in uber drivers and users; individuals can not afford to pay that amount, so most taxis licenses are owned by corporations.