Taxi Driver Who Drove Bob Marley Explains How to Fix New York City's Taxi Crisis

NEW YORK - June 27, 2019 - PRLog -- The quickest way fix to this problem - other than the City buying back the medallions at their sale prices - is to create a new class of Taxis that replicate Via and shared ride services from Lyft and Uber. These are extremely useful to the public and profitable for the drivers - but they often require relatively long waits, smartphone and accounts.

Making a sophisticated version of this service available through a new class of "supertaxis" could solve this problem and create a new Asset that can be offered to troubled drivers to offset their losses.

In this finely argued article, former cab driver who once drove Bob Marley to his final US concert, explains how taxis can be saved from ruin, the City earn more money and the public be better served.

Taking inspiration from his onetime fare, Brody says, "Let's Get Together and Be All Right. One Love!"

Read Here: How to Fix New York CIty's Taxi Crisis
Leverage the Medallion into the Digital Economy

By Alan Brody

(Read the full article here: https://brodysez.blogspot.com/2019/06/how-to-fix-taxicris...)

The New York Taxi - once, one of the surest vehicles for immigrants to reach middle class America, has now become a kind of suicide machine - overpriced, overtaxed, over-regulated and easily manipulated by insiders with some level of collusion from the City itself.

Taxis are today's victim of digital disruption thanks to app-based ride services. The City will try to stem this with new regulations. Other solutions, like debt relief and giving troubled cabbies free counseling through the billion-dollar Thrive mental health initiative, are either weak or laughable. Whatever the approach, none are likely to restore the market value of the medallion.

The bigger story is that many more institutions are likely to be upended by digital disruption. It was Bob Dylan who said, The Times are a Changin' and Hemingway noted that going broke, happens two ways, gradually and then suddenly.

Luckily, there is a fix to the Taxi Crisis but you'd have to understand what the City really did here and then think out of the box.

New York, may be a Sanctuary City beloved by immigrants, but it can also exploit them on the grandest scale. I was once a cabbie and found that it was grueling and incredibly hard to make money unless you were an independent owner or worked for one – too many agencies and corporate entities stood between you and the money flowing through the meter. So, it is understandable that drivers wanted to buy their independence at any cost. This was the case even back when a medallion was worth as much as or more than a seat on the New York Stock Exchange. It was a time, I might add, when I got to drive Bob Marley and the Wailers to Carnegie Hall just before his last concert on earth in 1981! We had a great conversation and I'm sure he would agree saying, "Let's Get Together and Be All Right. One Love!"

Here's how.

Everything may be different today but even so, that relationship between taxi and the stock market gives rise to a creative solution – if we just think out of the box.

It is worth first considering what a medallion really is – an artificially created store of value based on legislated scarcity. By limiting the number of taxi cabs to around 11,000 and then selling a permit called a medallion, the City of New York created a kind of security. In today's terms, it slightly resembles a cryptocurrency that is secured by local fiat rather than an algorithm. It may not have been that way at first, when the City sold the medallions for $10 but without any constraints on the aftermarket sales. As demand grew and the scarcity remained, a medallion became a kind of security that soared in value to over a million dollars. Lacking any of the SEC's oversight protection, it became a game that a handful of insiders could exploit and the City obviously knew it.
When the Bloomberg administration decided that New York needed 2,000 more taxis and a major new source of revenue, it began auctioning off the medallions and raked in billions of dollars. If this were a stock they advertised with the kinds of outrageous promises of wealth they made, the SEC would have sued. If it were Bitcoin, the famously limited cryptocurrency, it would be as if mysterious founder Satoshi Nakamoto decided that a few extra bitcoin couldn't hurt.

Diluting the Medallion scarcity by 18% or so may not be harmful in and of itself but then two things happened which can only take place in an unregulated and ultimately irresponsible market. The City allowed insiders to rig the market simply by driving up the value of a few medallions and then as the price seemed set, offered easy credit while to satisfy the frenzy of would-be medallion owners that the City whipped up – many of whom were immigrants that thought the City guaranteed its value.

At the same time, the City opened the floodgates to app-based ride hail services like Uber, Lyft, Via and so on which, in many ways are more convenient than taxis. They are also much cheaper because the taxis have so many surcharges that their cost per mile is almost double. The City not only created the taxi scarcity but then undermined it. While they were auctioning off their freshly printed medallions, they were also removing its floor it with a flood of superior transport services for which they were raking in new registration fees.

Given that the City was profiting at every level, they have to take some responsibility for this growing disaster – desperately underwater taxi owners who are now slave-driving for their medallion creditors and city streets choked with Ubers and Lyfts hungry for fares.

One solution would be for the city to buy back its medallions at a rate close to its onetime sale price. This is what market makers at the New York Stock Exchange might have done if a blue chip stock's price value tanked unfairly. The City, however, is much more likely to go chasing after a few market manipulators than assume any blame or financial burden. After all, being an administrator means never having to say you're sorry. And at least, they didn't try to sell immigrants the Brooklyn Bridge – arguably a better deal, given the assured bridge scarcity!

But there may be another way. After all, app-hailing services are not going away and while taxis will always have their place as the impulse ride of the middle class, urban transportation has changed forever. And there will be more changes to come.

So, why not anticipate this and create a new class of value, protect it and then compensate the troubled cab owners by giving them free first rights in this new "security" - what Wall Street might refer to as warrants.

As of now, the most valuable service to the City, which taxis generally do not offer is the hailed rideshare. Via, Lyft Shared and Uber Pool are examples of arranged rideshares and they are all quite lucrative. Hailed rideshare is more convenient and workable only because technology can constantly optimize the route within obvious general direction parameters. In general taxi space is mostly devoted to 1.5 riders, meaning that 1.5 seats are almost always vacant and even more in Minivans. By allowing certain medallion owners the right to upgrade to a rideshare vehicle, or a discount on a separate new rideshare medallion for a set fee - with appropriate resale covenants – they might get a shot at financial recovery through the creation of a new transportation class. In return, the public gets better ride options and less empty cars on the streets.

Hailed rideshare taxis, sometimes around the world as jitneys, are hardly new but technology has already transformed them. Instead of plying fixed routes they can optimize the routing of passengers as they step on board using a dynamic algorithm. They can serve special routes such as feeding the subways in 2 fare zones as demand arises and in other cases ferry kids to and from schools and – after school events. They may even get special rights to use bus lanes.

Passenger can hail them or use their smartphones or Lynk kiosks to summon their best ride option. All of these applications are easily available with current technology – and likely to be understood by the next generation of bureaucrats and riders alike.

The fact is, New York City taxis were disrupted and the City cannot turn back the clock or try to legislate the tide. It has to learn to swim with it and giving us an intelligent street-level ride share system that serves all Boroughs is one way to do it.