Dean Baker | The Sharing Economy and the Mystery of the Mystery of Inequality

Last week I had a fascinating 3:00 AM cab ride from San Francisco airport to a hotel in downtown Oakland. My cab driver was an immigrant from Pakistan who was putting two kids through college. After working for years as a driver he managed to save enough money to buy his own cab, and more importantly to buy the medallion that gives him the right to operate a cab in San Francisco. The medallion cost $250,000. He is still paying $2,300 a month on the loan to get the medallion in an addition to annual fee to the city of $1,500.

The medallion is far from the only cost the city imposes on cab drivers. It requires a special license, which involves four days of classes (i.e. lost work time), plus fees. They also must get a special background check by the FBI and a special badge, both of which involve additional fees. In addition, cab owners must have a special safety inspection for their car and brakes, which means yet more time and fees. And they must carry a $1 million insurance policy to protect passengers, which costs around $750 a month.