A drive for public ownership of the system by Mayor LaGuardia invoked clauses requiring the sale of the system, and eventually all the private subway companies were driven out of business. But the sanctity of the nickel fare made inflation-driven fare increases politically infeasible. The original subway lines were public-private partnerships run by private firms operating under a government franchise. Just as over-regulation harmed yellow cabs, it also established a pattern of neglect for our mass transit system. Regulation failed, and jitneys, black cars, green cars, and finally Uber and Lyft displaced yellow cabs. Cabbies no longer owned cabs, but leased time in them from fleet owners who kept each cab in service 24 hours a day. There were too few cabs, especially outside of the central business district.
The license was far more valuable than the vehicle or the business itself. At its peak, a medallion cost a million dollars. Long ago, New York City set a cap on the number of yellow cabs and the cost of entry into that business got absurdly high. But we need to avoid over-regulation that destroys private businesses and replaces incentives with prohibitions. We regulate safety, minimum pay, and working conditions in hotels, restaurants and cabs, and it makes sense to protect workers and customers in these new businesses as well. The New York City Council is struggling to develop a governance mechanism for new forms of business such as Airbnb and Uber.