Friday, April 24, 2009

$20 Million and the Goose that Laid the Golden Egg

Taxi Medallions are like diamonds. The more there are the less they are worth.

The MTA fantasy of balancing their budget by auctioning off more and more taxicabs can only end with them holding the dead goose of the fairy tale; or, rather, leaving us with the corpse.

The very fact that they are even considering putting cabs on the street during this recession has already lowered the value of the taxis. It shows that they are erratic and don't understand the business that they want to run.
  • For instance, they set up Town Hall meetings which includes experts from all sides of the industry to study ways of improving the taxicab business under the direction of  the intelligent and open-minded Chris Hayashi.
  • Then, they come out with their half-baked plan to make themselves money before the question of transferability has really even been discussed at these meetings.
In my opinion, only a fool would buy a taxicab under these conditions.
  • There are no controls on the MTA. Unlike the Taxi Commission, they apparently can do what they like without input from anyone else - i.e. people who understand the taxi business.
  • If they do manage to raise their $20 million, the MTA will simply continue to put cabs on the street until the medallions are worthless.
The reality is that we might not be too far away from valueless medallions right now.
  1. Under the current system the medallions get their value from being leased out.
  2. As long as companies can get people to drive the cabs, the medallions make money.
  3. But, if the drivers stop making money, they stop filling their shifts and medallions loose value - sometimes to the point where they become worthless.
  4. This has repeatedly happened in numerous cities like Seattle, Oakland and Minneapolis.
  5. There are indications that this may already be happening here now. Despite the high unemployment rates, companies already have shifts that can't be filled and even more shifts where drivers hardly make any money .
No matter what your feelings are about transferability, you should oppose the MTA budget - as loudly, vigorously and frequently as possible. Being able to transfer a medallion that no one wants to buy will not secure anyone's retirement.

Beyond that I think we should start working on a ballot measure to take the cab business of the hands of the MTA. They've been in control for less than two months and they've already come up with three or fours ways to destroy our business. Let's try to stop them before they ruin us.

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