Sunday, January 23rd, 2011

The price of taxis

Felix Salmon has an interesting post on the price of taxicab medallions in New York City: a perfect illustration of the increasingly lopsided distribution of rewards between the owners of capital and the owners of labor in American capitalism.

The owners of taxicabs–what Karl Marx would call the “means of production”– are doing great: despite a financial crisis that has sent financial markets reeling, taxicab medallions needed to operate a cab sell for as much as $880,000, up from $425,000 in October of 2007.

Drivers are not doing quite so well. They do not own their cars but lease them from the owners for a hefty fee. Salmon says that their average income is $130, less than what they pay owners. While this is probably an exaggeration (otherwise cab drivers would have all left the business), it is clear that the most of the benefits from rising fares are flowing to the owners of the medallions.

Incidentally, this fits the broader pattern of distribution of rewards in the American economy. In the past decade, corporate profits’ have risen from 9.2% to 12.7% of total national income, according to government figures. In the same period, the share of national income devoted to wages has shrunk from 54.5% to 50%.

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