A recent editorial in The New York Times commented on the fact that a taxi driver in New York City, who owns and operates his own cab, must have a medallion, now worth $26,500.
This medallion, a metal plate attached to the cab, is, in effect, a license to operate a cab on the city streets. The City fathers have seen fit to limit the number of cabs to a specified figure. As a result, the only way to become a cabbie is to acquire one of these medallions.
The market attaches a value to this privilege, so medallions are bought and sold or handed down from father to son or acquired by some other method. Once a medallion is obtained, then the owner can go about getting his auto and other tools of his trade.
The Times referred to the taxi driver as “The Capitalist Cabbie” and of course he is just that. It appears that it would require about $30,000 to set a man up in the business.
If this seems a rather big investment in a job, think for a moment of the average factory worker over the country. Someone must have invested $18,000 to $20,000 to set up his job. In some industries it is much more and may run to nearly $100,000 for each employee. This investment provides the plant or place to work, tools to work with, and whatever else is necessary to make the best use of the worker’s time and effort.
A farmer may invest $50,000 to $100,000 in a farm to provide himself with a job. A physician may invest thousands of dollars in a specialized education and in the tools of his trade before he can hang out his shingle. You can think of many occupations which must be accompanied by a sizable investment.
There is this difference: In the case of the factory worker or the farmer, the investment in the tools of his trade represents actual, physical things. The cost of a taxi driver’s medallion, however, represents only a legal privilege—the cost of excluding others from the job by force.