Sunday, January 24, 2010

One of NYC's Wealthiest and Most Powerful Individuals... there by taking advantage of New Yok City's limitation on the number of taxis permitted to operate in the city.

NyPo reports on this artificially created bull market:
One of the city's best investments is right under New Yorkers' noses.

Actually, it's on the hood of their taxis.

Yellow-cab medallions -- those small, plastic emblems attached to the hood of every taxi, allowing the cabs to pick up passengers on the streets -- have risen in value an average of 15 percent annually for the past 70 years, with just a few down years.
The limitation on the number of medallions creates a shortage in the number of taxis, resulting in cab fares that are much higher than they would otherwise be, and on top of it the NYC Taxi and Limousine Commission sets prices and prevents price cutting.

This creates wealth at the expense of the consumer. Here's more from NyPo:
Gene Friedman, one of the city's most powerful and wealthy executives, is hardly a household name.

But the 39-year-old chief executive of Taxi Club Management owns one of the largest collections of city taxi medallions, industry sources say, with roughly 700 to his name.

And with the price of a corporate medallion hovering at $775,000 -- according to the average sale price in December, the latest figures available -- the value of Friedman's taxi portfolio is roughly $542.5 million.

His fleet comprises about 5.3 percent of the city's 13,237 medallions.

In 2006, Friedman made news when he successfully bid $25.8 million to win all 54 of the city's new wheelchair-accessible medallions for sale. While a steep price at the time, they have grown in value by 62 percent in just under four years.

It's the TLC limits on the number of cabs that can operate and the price controls, all to the benefit of taxicab owners that creates the high medallion price.

If it wasn't for the TLC "helping" the consumer, someone could get into the business for the price of a car, not the price of a car PLUS $775,000. And if the TLC price controls that prevent price cutting were removed, there would obviously be many more taxis and a lot lower fares because of all the new competition.

End the TLC!

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