What’s a Million Bucks?

Since I was a child, there has been something special about a million dollars. From the “what would you do if you had a million dollars” question to “wow, he’s worth a million dollars a movie” statement about some top-billed actor, a million dollars has always loomed relatively large in the imagination.

Of course, that was before we started talking about billions for food stamps and trillions for Social Security. Now, it costs a million dollars for the privilege of owning a New York City cab:

By law, every cab in New York has to have an official medallion — the numbered metal plate nailed to the hood — but the number of medallions is fixed at 13,237. When the city first issued taxi medallions in the 1930s, they cost $10 each. But before long the demand for taxi ownership had outstripped the limited supply of medallions. Since City Hall wasn’t issuing new ones, the only way to get a medallion was to buy one from an existing owner. Over time the value of those metal tags went through the stratosphere.

In the years after World War II, a New York City taxi medallion could be had for $2,500. By the mid-1970s the going price was $50,000. In 1985, when a medallion changed hands for $100,000, it made the front page of The New York Times. That sale was arranged by a “taxi financing specialist’’ named Nat Goldbetter, a one-time cabdriver who discovered he could make a better living arranging medallion sales on the secondary market. By coincidence, it was Goldbetter who arranged the sale of the million-dollar medallions last month, landing him again on Page 1. “Nobody ever thought the medallion would get to this point,’’ he marveled.

You would have to look hard and far to find a clearer example of what happens when government sets the number of service providers in a given market at well below what the market would support.