I basically always assumed that, in huge cities like NYC and London, because streets are a fixed resource, the only way to prevent severe congestion by cabs was by limiting the number of cabs available. In other words, that the natural economic supply-and-demand of cabs would be a number too large for the streets (or at least annoyingly large), thus the necessity of limiting them. But perhaps my assumption is wrong, and the limited number of NYC taxicab medallions has nothing to do with fear of taxi congestion.
Just think through your original proposition: "too many" taxis hit the streets thus making the job not pay a living wage, the natural consequence of this would be many people giving up driving taxis for precisely this reason. Now there are less taxis, and thus the price increases. Continue this cycling and eventually you reach equilibrium -- that's precisely how it works. Notice we don't need a limit on plumbers to make sure they make a living wage.
I think the idea was more: "too many" taxis hit the streets, and while they make a living wage, traffic doesn't move. In fact, as a taxi driver, with a time-based meter, traffic congestion may not decrease wages at all. Given the density of Manhattan, it wouldn't surprise me if there was more demand for taxis than the road system could support (I'm not saying that's true, I don't have the data, just that it's a third factor besides supply and demand).
> as a taxi driver, with a time-based meter, traffic congestion may not decrease wages at all.
Um, no. The initial value on the meter is set in such a way that cabbies make more money from picking up lots of fares that from picking up one and getting it hopelessly stuck in traffic.
Incidentally, private jitneys (where legal or tolerated) evolved a different rate system that's even better for consumers - the "rate card". Instead of a big, expensive, complicated piece of machinery, there's a map of the city divided into "zones" and a flat rate to travel within one "zone" or to cross X number of zones. The map might be printed on a sticker on the door (so you see it before you enter the cab) or on a playing card or business card the driver displays or hands you.
As a passenger, you then know the cabbie has no incentive at all to waste time in traffic and you know what the fare will be at the time you get in.
Regulators don't like that system because they can't reliably tax unmetered trips.
good point, I wasn't aware that congestion might be a problem. But there must be a better way than the medallion system. how about a toll at peak times?
