Monday, July 18, 2011

The Political Influence Game Cuomo Style

Here's a twist on the political influence game, while Andrew Cuomo serves as governor of New York, his father plays a key role with one of the most powerful industries in NYC.

NYT explains:
Nearly a month after the State Legislature passed a bill drastically expanding access to taxi service in New York City, Gov. Andrew M. Cuomo has yet to signal whether he will sign the measure — providing hope to the city’s larger taxi fleet operators who oppose it.
The fleet owners have stepped up efforts to persuade the governor to veto the legislation, arguing that the measure could jeopardize one of the city’s most vital industries...

The bill would allow the issuance of up to 30,000 permits, for $1,500 apiece, for a new type of livery cab. These cabs, while painted a different color, would have many of the features of yellow taxis, like meters, rate cards and credit card machines. But they would be restricted to picking up street hails in often under-served parts of Manhattan and in the city’s other four boroughs except for airports.

The bill has not yet been submitted to the governor; the Legislature plans to first pass an amendment that would require these new types of taxis, like yellow cabs, to impose a 50-cent surcharge per fare for the Metropolitan Transportation Authority...

Mr. Cuomo remains quiet on his plans. At a news conference last week, he noted that he had not received the bill. “When we get it, we’ll review it,” he said.

Mr. Cuomo’s father, the former governor Mario M. Cuomo, serves on the board of Medallion Financial, which has a major stake in many of the city’s taxis and has opposed the bill. Medallion also has been a generous donor to Andrew Cuomo’s campaigns. Josh Vlasto, a spokesman for the governor, said previously that these relationships had “no bearing on the governor’s decision.”
The existence of government created power centers, even in the seemingly mundane world of the taxi cab industry, creates opportunity for huge political shakedowns, which in tag-team style the father-son Cuomo team are turning into a science.

As of February of this year a the price of a taxi medallion (the right to drive a taxi in NYC), because of  NYC limitations on the number of taxis, stood for corporations at $950,000 (for individuals it's at $641,000).

If the city ever opened the taxi cab industry to all who wanted to enter the industry, these medallion prices would collapse. It's no wonder that the medallion owners are willing to keep the high priced father of the governor on their payroll. It's to keep the oligopoly intact and to keep the oligopoly price of madallions forever climbing.


  1. Am I getting this right? It costs over half a million dollars for an individual to get a permit to drive a cab?

  2. @Anonymous

    Those are the costs to buy a medallion from someone who already has one to put a taxi on the street of NYC.

  3. Robert, thanks for the reply.

    Just to clarify: The city issued a fixed number of medallions (permits), making them scarce. Therefore, the only way to get one is to buy from someone who already has one. And the going price for an individual is $641,000. Is that about right?