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Uber,lyft and other taxis

The story of the yellow taxis

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The medallion market for taxis has just entered the next phase of its development. On March 28th, 2018 at the auction a certain creditor bought only 15 taxi licenses for $3 million, which is well above Uber rates. We can recall the time when a licensing of this type could cost about $3 million just for one. Judging by the reaction of the Federal Credit Union Bay Ridge, they did not expect that someone would buy licenses at this price at the moment.

The head of the credit union Anthony Grigos expressed his concern about the possible pressure from the creditors and that they might go back on their commitments. He assured that the auction was created to return 15 medallions into the hands of drivers.

The experience of previous auctions gave some guarantee that the yellow taxi licenses will stay in the hands of the bank for this price. The bank is more interested in these types of medallions since the driver paying a loan of $300 thousand is a long-term client that is more interesting for banks than a private investor who pays cash in one payment.

The credit union also has its intentions in relation to the license holders who want to exit the business. Alternatively, they are planning to keep people and offer a loan with the lowest interest.

The medallions that were sold earlier for millions of dollars began to destroy the share of the taxi market in the state of New York. Hundreds of loans made at that period lost their value because of reducing income from taxi fares, and this led the borrowers into financial crisis. This economic routine has already led to a suicide.

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Uber,lyft and other taxis

New York could get by with fewer big yellow taxis

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Uber be damned. One of the most iconic sights for visitors to New York City is the vast numbers of yellow taxis that line the streets of Manhattan.

Mathematical modelling from a team led by Mohammad Vazifeh from the Massachusetts Institute of Technology, however, reveals that around 40% of the vehicles that comprise the city’s taxi fleet are superfluous.

In a paper published in the journal Nature, Vazifeh and colleagues outline a new model for determining taxi efficiency, based on 150 million trips taken in a single year, that shows that more than one-third of the current fleet could be removed without requiring changes to regulation, business models or customer habits.

The model changes a critical assumption in previous attempts to establish a viable answer to what mathematicians call the “minimum fleet problem”. Earlier approaches have based calculations on ride-sharing – that is, two or more passengers occupying a vehicle at the same time, but being delivered to geographically different locations. Vazifeh’s team ditched that assumption, and used instead the notion of vehicle-sharing – wherein each taxi is in continuous use for 24 hours a day, driven in three eight-hour shifts.

(In this scenario, routine car maintenance is assumed to take place periodically on weekends, when the number of passenger requests drops.)

The researchers approached the problem by identifying the essential variables involved in each taxi journey – pick-up time and location, drop-off time and location, and how much time passes between a passenger being ready for pick-up, and pick up actually occurring.

Journey times were calculated using GPS data arising from real New York City streets rather than an idealised model.

Setting the variable for waiting time turned out to be the greatest challenge in the model, because it also determined a number of other real-world outcomes, including costs to the fleet operator, customer satisfaction, and traffic flow.

At one end of the scale, the researchers explained, setting the waiting time to an impossible zero seconds resulted in the assumption that taxis simply materialise and disappear at the start and end of journeys. This was not only unfeasible but also prohibitively costly.

On the other hand, they show, increasing the wait time into the region of hours results in the need for a much smaller fleet – but also produces what they term, euphemistically, “operational and traffic efficiency problems” – a phrase that could be understood to mean “a very large number of very angry New Yorkers”.

For the sake of the exercise, thus, Vazifeh and colleagues set optimal waiting time at 15 minutes.

Putting all the variables together and running the numbers, based on the previously collected data, the results were impressive.

“The efficiency breakthrough provided by network-based optimisation, when compared to current taxi operation in New York City, [revealed] the number of circulating taxis can be reduced by an impressive 40%, and kept fairly constant through the day,” the researchers conclude.

Two other conditions, however, informed the results – a high level of knowledge on the part of the operators concerning journey destination as well as start-point, and a centralised dispatch system.

The researchers then ran the numbers again, varying these conditions. When knowledge of destinations was absent in a large number of vehicle hires before the passenger is picked up, and when dispatch is through localised hubs, the total taxi fleet could still be reduced by 30% without loss of service.

Source: https://cosmosmagazine.com/mathematics/new-york-could-get-by-with-fewer-big-yellow-taxis

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What taxi medallions can teach us about cryptocurrencies

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Taxicab medallions have been in the news in recent weeks due to the widely publicized involvement of Michael Cohen, President Trump’s former attorney, in the New York City taxicab business.

Much of Cohen’s wealth in recent years had been attributed to the steadily rising value of the taxicab medallions he owned, but like all cryptocurrencies, Cohen’s supposed medallion wealth was merely an illusion that is no more.

Cabs cannot operate in New York, Chicago, San Francisco or Boston unless they have a medallion, which effectively is a city permit to carry passengers for hire.

Although not widely understood, the artificial, politically imposed limit on the number of medallions a city will issue — an artificial shortage if you will — for many years led to a steady increase in the market value of medallions as the number of taxi passengers increased.

That rising value, and the returns medallion owners expected to earn, created many distortions in the New York taxi business, including gypsy cabs and the absence of cabs in poorer neighborhoods.

Limiting the number of taxi medallions a city would issue has a parallel in the crypto world — an artificial limit on the number of units of a particular cryptocurrency that could ever be issued.

For example, according to the design of the bitcoin algorithm and database, supposedly developed by someone named Satoshi Nakamoto, no more than 21 million bitcoins will ever be created.

Further, the computational effort required to “produce” each additional bitcoin steadily increases as that limit is approached, further enhancing that sense of scarcity.

The design of the bitcoin algorithm has been seen as brilliant, but in fact it is not, for artificial scarcities do not produce sustainable value.

In each instance, there is no real value — readily available permits issued without limit have no resale value. Cryptocurrencies that can easily be replicated under a different name have no intrinsic value, they have no claim on real-world assets, there is no “there” there.

For a while, these artificial limits worked: Values rose steadily, and the owners of these scarce items got rich. Then technology reared its ugly head, in the form of computerized ride-sharing — Uber, Lyft and their many knock-offs — and cryptocurrency “forking,” such as bitcoin begetting bitcoin cash and bitcoin gold.

According to one report, the price of a New York taxicab medallion peaked at over $1 million in 2013. Currently, they are priced as low as $175,000, a price decline over 80 percent. Boston and Chicago taxi medallions have seen sharp price declines, too.

Comparable price drops have occurred in the crypto world. Based on data from www.coinmarketcap.com, at 1 p.m., Eastern Time, Thursday, bitcoin, the most valuable cryptocurrency, was selling for $7,529, down 63 percent from its peak price of $20,089 last Dec. 17.

Bitcoin price recoveries since then have quickly petered out. For example, after hitting a low of $6,636 on April 6, bitcoin recovered to a peak of $9,965 on May 5 before beginning its current price plunge.

Other major cryptocurrencies have experienced similar price declines. After peaking at $1,433 on Jan. 13 of this year, at 1 p.m. Thursday, Ether, the second most-valuable crypto, was priced at $585, down 59 percent from its peak.

Ripple, XRP, the third most-valuable crypto, peaked at $3.84 on Jan. 4 before beginning its price plunge. At 1 p.m. Thursday, XRP was priced at $0.623, a price drop of 84 percent.

The total market value of all cryptocurrencies peaked at $595 billion on Jan. 18. Nearly four months later, that number has dropped to $333 billion, a loss in market value of $262 billion, or 44 percent.

While many investors have only experienced paper losses on their cryptocurrency investments, the substantial crypto trading activity in recent months suggests that actual, realized losses suffered by crypto investors are in the tens of billions of dollars, if not much more.

Although there is no hard data on the extent to which crypto investors have made leveraged bets, by financing their crypto purchases with credit card advances or by refinancing their home mortgage, anecdotal reports suggest that such debt-fueled speculating has been extensive.

Many taxicab medallion purchases were financed, too. The subsequent drop in medallion prices has led to many medallion foreclosures and substantial losses to lenders. At least two credit unions have failed due to losses on their medallion loans.

Lenders to crypto investors will suffer losses, too. Often, though, they will not have realized that they had financed a cryptocurrency speculation.

There is every reason to believe cryptocurrency prices, like taxi medallion prices, will continue to decline because in a very fundamental sense, they have no real value. As I have written in previous Hill op-eds, cryptocurrencies do not function well as money, and they have been, and will continue to be, a terrible store of value.

Worst, unlike taxi medallions, cryptocurrencies generate no income or cash flow. Consequently, the only reason to invest in a cryptocurrency is the expectation of endless price appreciation, which requires a belief that the “greater fool theory” will work indefinitely.

That most definitely will not be the case for taxicab medallions, or for cryptocurrencies.

Source: http://thehill.com/opinion/finance/389226-what-taxi-medallions-can-teach-us-about-cryptocurrencies

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NYC Taxi Driver’s Disappearance Sparks Fear, Frustration Among Other Desperate Cabbies

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New York City’s yellow taxi drivers were once fiercely competitive with each other, but these days, they have Uber, Lyft and other competition to worry about — competition, they say, that has pushed many cabbies to the brink of financial ruin, with their expensive medallions now hardly worth anything.

Some fear that desperation is the reason one of their fellow drivers is missing. Kenny Chow has been gone 11 days as of Tuesday, and his brother Richard Chow has been posting fliers near where Kenny’s abandoned taxi was found, near the corner of 86th Street and East End Avenue.
“I was looking around the park. He never showed,” said Richard Chow. “I’m very, very worried about my brother.”

Richard said his brother owed $700,000 on the loan for his medallion, working 14-hour shifts without a partner. The missing man’s wife was also recently diagnosed with stage four colon cancer.

The New York Taxi Workers Alliance organized a rally on the Upper East Side in the wake of Kenny Chow’s disappearance, and the anger of the roughly two dozen drivers was palpable. Asked to raise a hand if they were in financial trouble, everyone’s hands went up.
Then, fear and frustration spilled out.

“No one really seems to give a damn,” one driver said. “I invest in this city.”
Nicolae Hent, who immigrated from Romania in 1988, angrily disparaged Uber, Lyft and Juno — the ride share companies are only loosely regulated in New York City, compared to yellow taxi drivers — saying, “I may speak with an accent, but I’m not stupid.”

Hent’s best friend was one of four cab drivers to recently die by suicide. He believes app-based services like Uber are driving taxi drivers into desperation. Taxi medallions were worth over $1 million in 2014; now, they sell for as little as $175,000, according to The New York Times. Once a guaranteed livelihood and retirement fund, especially for new immigrants, the value of the medallion has nosedived amid the rise in ride-sharing apps.

Kenny Chow himself purchased a medallion in 2010, after turning to driving as a profession in 2008, according to the New York Taxi Workers Alliance. He’d been a jeweler for 20 years before that, but had to change professions when his employer closed shop. The “devoted” father and husband worked hard to rebuild his life with the hope of having stable work “but instability of the past five years caused him increasing anxiety,” Hent said.
Hent said “nothing’s being done to help,” adding that he believes it’s because of “pressure from up above.”

He points to Mayor Bill de Blasio’s failed 2015 proposal to cap new permits, something that current City Council Speaker Corey Johnson conceded on WNYC Radio was a mistake not to support.

“I’ll give myself some demerits for not understanding the depth of this and grasping the issues that we would come to face over three years ago. I was skeptical at the time. I didn’t sign on as a sponsor of that bill,” Johnson said.
He now tells News 4 the Council is looking at several bills to regulate the for-hire industry.

“The City Council understands that the taxi industry is going through a seismic shift right now, one that has caused a lot of pain for drivers who are worried about their livelihoods,” he said in a statement. “The Council is looking at several bills to regulate the for-hire vehicle industry, both to protect drivers and to cut down on congestion, as they go through the legislative process.”

But that might be too late for a driver like Janna Stroe. The 60-year-old still owes $500,000 on her medallion.

“I have to live another life to pay this loan,” she said, adding that losing her husband to cancer piled onto her debt.
The New York Taxi Workers Alliance says bills to regulate ride-sharing app companies notwithstanding, the group’s main economic concerns remain unaddressed — like regulating one minimum fare rate across the industry so that no one company can go lower.

A spokesman for Mayor de Blasio recently told The New York Times that new regulations on for-hire vehicles were being discussed again: “The mayor has been clear about the need to re-evaluate our options in the face of explosive growth we’re seeing in the industry,” spokesman Austin Finan said.

Source: https://www.nbclosangeles.com/news/national-international/NYC-Taxi-Driver-Disappearance-Sparks-Anger-Fear-Frustration-Yellow-Cab-Drivers-Rally-483401101.html

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