The U.S. Supreme Court has let stand a lower federal court decision killing the entire system of cab medallions/taxes. The cab cartel is now doomed. It was a major step in the direction of liberty.
Chicago's taxicab industry is likely to turn into a "Wild West" dominated by independent drivers, with fleets disappearing and the city losing control, after the U.S. Supreme Court on Monday dealt the struggling industry a final flow.By refusing to hear the taxi industry's appeal, the nation's highest court let stand a federal appeals court ruling last fall that snuffed out an attempt by the cab companies to level what they called an uneven playing field that favors Uber, whose investors include Mayor Rahm Emanuel's brother.
How the liberal media hate competition. It's "wild west." They want the politicians to serve as neutral sheriffs, bringing peace, justice, and order.
In fact, the local politicians raise prices, reduce service, and milk the cab companies for taxes: medallions.
It's all gone now in Chicago. New York City is next.
The appeals court ruling essentially said that the business models between taxis and ride-hailing services are different and, therefore, they can continue to operate under different sets of rules in Chicago.That decision validated a 2014 City Council ordinance that let Uber and Lyft operate in the city without taxi medallions, city-regulated fares, fingerprinting or other standards cab companies and their drivers must follow.
Mara Georges, the former longtime city corporation counsel now representing the taxicab industry, said Monday's ruling could be a death blow for the cab industry as Chicagoans have come to know it.
"The fleets will disappear and you'll have taxis owned by individual owners. The problem with that is that much of the control the city has exercised over taxicabs has come through the fleet," Georges said.
This is good news for the citizens of Chicago.
"It's going to end up being more of a Wild West situation where you've got all kinds of independent drivers out there just looking to pick up fares and make as much money as they can," she said.
It is going to be the end of a cartel that got protection from competition from the city's politicians -- at a price.
The last gasp of the cartel gets quoted.
"A tremendously big step is to think about the fact that the public is not served when drivers are not fingerprinted and impose a fingerprinting requirement on everybody. All people who drive for hire. Not just some of the people who drive for hire," Georges said.
The libertarian public affairs legal services Institute for Justice claimed victory.
"The Court's decision has cleared the way for transportation freedom across the country," Institute for Justice Senior Attorney Anthony Sanders was quoted as saying in a press release."In city after city, we are seeing lawsuits like these filed by incumbent businesses that want to freeze the current regulatory environment in amber," the release said. "And these lawsuits, rightly, are failing. Consumers and entrepreneurs, not lawyers and bureaucrats, should decide what transportation options are available."
You can read the IJ's version of the story Legal theorist and federal judge Richard Posner handed down the ruling. He switched to Keynesianism from Chicago school economics at age 70 in 2009. Maybe he switched back for one ruling. "Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt," he said. "Instead of taxis, we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement." Let us hope that this ruling sends a memo to the cities, especially New York City, that milked the cab companies for medallion money. The politicians milked the cabs' customers by way of the cab companies. They let the cabbies collect high fares without legal competition to bring fares down. Those days are over. Banks will take a big hit. In January, Bloomberg published this. Medallions, the small metal shields affixed to the hoods of taxi cabs, are issued by the local taxi authority and effectively allow the cabs to operate legally. Owning one used to be akin to owning a gas-guzzling, money-printing machine. Medallions in New York City traded at more than $1 million in 2014, but today's prices are about half of that. Now the share of taxi medallion loans Capital One thinks its borrowers won't be able to repay in full has nearly tripled over the past year, to 51.5 percent. (Another 29 percent of loans are to stressed borrowers who could be in trouble soon.) BankUnited told its investors in November that nearly 59 percent of its loans secured by taxi medallions were under water. Close to 95 percent of the BankUnited's loans were to New York City borrowers. "This is the portion of our loan portfolio that we keep the closest eye on, for obvious reasons," Rajinder Singh, then BankUnited's chief operating officer, told investors last January. It looked like easy money to banks. Lend cab firms a million dollars per cab in New York City. What could possibly go wrong? The banks can kiss these loans goodbye now. This shows just how fast smart phone technologies are killing lumbering corporate dinosaurs that survive only because of government regulation -- a protection scheme comparable to the Mafia's version. The technologies are being implemented faster than the dinosaurs can react. Governments regulate industries created before the Internet. The new markets are creating new businesses that are outside the old markets. The old rules no longer apply. The cartels are breaking down. This is good for liberty. It has only just begun.
"Indeed, when new technologies or new business methods appear, a common result is the decline or even the disappearance of the old," Posner wrote then.
According to a recent presentation prepared for Capital One Financial Corp. investors, some 81 percent of its $690 million in loans for taxi medallions are at risk of default.
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