Slate has an article about how the medallion system that limits the number of taxis in New York is good for medallion owners, but bad for passengers.
The article gets two important things correct. First, the government restriction on the number of taxis hurts consumers: "More importantly, New York's tight limits on the number of medallions in circulation has suppressed the supply of cabs." And second, there's what the Slate authors call a "structural explanation" for why the government hasn't changed the rules to make them more consumer-friendly: "While the costs of medallion ownership are spread over an entire city, the benefits accrue to a single-issue constituency that fights in proportion to how much their medallions are worth. In New York, the owners have put in an effort worthy of a seven-figure asset, from fundraising for New York Gov. Andrew Cuomo to courting borough politicians. Medallion owners may not contribute to a better taxi industry, but when it comes to politics, they work harder than the rest of us do."
Where the Slate article goes off track is when it interprets the taxi problems in New York as "a classic example of the perils of financialization, the process through which economic potential is turned into a liquid and leveraged asset." The article doesn't mention any of the benefits of financialization. The market in medallions makes it easier for someone who owns one to diversify and offload some risk. It also means that taxis in New York tend to be newer than those in Washington, D.C., which lack a medallion system and which the article holds up as a kind of taxi utopia. The problems with taxis are not the result of financialization but of the government-imposed cap on the number of medallions.
The Slate article also gets mixed up on the topic of taxi-driver compensation:
In the years after, life was pretty good for cabbies, as it was for many low-skill employees in postwar America. Some drivers owned their cabs. The rest were unionized employees who worked on commission and received a full slate of employee benefits....While owners and financiers thrive, drivers are having a harder and harder time. Though figures for driver earnings are hard to come by and vary widely, shortly after the most recent fare raise in 2006, a report [Page 36] from an independent consulting company found that drivers' take-home pay for a 12-hour shift averaged $158. (Last year the NYTWA calculated it at $96.) By all accounts, it's slipped since.
It's one thing to compare today's taxi-driver compensation to those of the 1950s and say that the drivers are "having a harder and harder time." But today's drivers can buy things with their compensation that the drivers of the 1950s could not even imagine. In the 1950s, you might save up for a "long distance phone call." Today's taxi drivers talk to their relatives in Pakistan or Bangladesh, cellphone to cellphone, while they are driving. Today's taxi drivers may lack unionized employee benefits, but the health care their families get via the New York's expanded Medicaid includes medical procedures and medicines that were not available to even the wealthiest privately insured patients in the 1950s. Whatever the compensation is for today's taxi drivers, it is sufficiently attractive, given the alternatives available to persons who often have limited English proficiency. It beats being a Chinese-food delivery person because you don't have to ride a bicycle in the rain, and it beats being a janitor because you don't have to haul trash bags around or clean dirty toilets. It may even beat being a driver for a non-medallion "car service," a less-regulated breed that doesn't get much attention in the Slate article. And the income is in many cases supplemented by the Earned Income Tax Credit. All that helps explain why, as the Slate article says, there is an "oversupply of drivers looking to work." Finally, it's worth remembering that, while New York taxis now take credit cards, the taxi business has long been, and to some extent still is, a cash business that includes tip income, so there may well be some variation between what the drivers actually make and what they declare to the IRS, to the taxi owners, or to independent consulting companies compiling reports.