1) The medallions: Concentration of capital
The limited-number medallion system was begun (in the '20s?) as a liberal reform to promote owner-drivers - a bit like land reform. The independent minded (and competent!) yeoman N.Y. cabby was a staple of the populist films of the years that followed.
However, after WWII the medallions became trade-able (there's a carefully followed market) and by the '50s and '60s the medallions had fallen into the hands of large fleet owners using hired drivers (a la TV's "Taxi"). The fleet owners became heavy local political contributors and ensured that practically no new medallions were issued. While the shortages spawned upscale and downscale alternatives to the yellow medallion cabs, the capital gains have been astronomical, and for several decades (only medallion cabs can cruise the core of Manhattan).
2.) Class Struggle
As they became wage-laborers for large fleets the taxi drivers formed one on NY's most active and politically articulate labor unions. The TV show accurately reflects the level of camaraderie of the period. Even many a 60's pH dropout turned to cab driving. Salaries and conditions were reasonably high for unskilled blue collar employment.
In response the owners provoked a series crippling strikes. Above all, in the mid-seventies they promoted a series of regulatory changes that allowed them to appear to form mini-fleets that were not bound to union contracts (like the airline spin-offs). They then turned to "leasing" cabs to drivers on a daily rate basis - an early form of "outsourcing". With the union broken salaries, conditions (and car safety) started a steady and still ongoing 20 year race for the bottom.
20 years ago Wall Street, like the rest of us, noticed these developments. By the late '70s and early '80s I recall many casual reference to them by the NY business types and the Columbia Business School crowd.
3) Brave New World
Much of NY reminds me of my work in the third world in a "dual" economy. Every few years the exploitation of the drivers hits a new low which I assume to be rock bottom -- until it sinks further. In NY's ethnic politics the job has gone from the quintessential Israeli driver, to the Russian immigrant, to Latinos and some blacks, to upwardly aiming Sikhs and Pakistanis, to very newly arrived Bangladeshis. All in a few years. The lack solidarity from the rest of New York is surely partly racial. But as very stressed out, lightly trained employees, driving franticly on "piece work" rates, the drivers (and their crash record) don't attract much support from the consuming public.
It is a "near-lumpen" situation that Gulliani exploits by attacking the drivers shortcomings (and calling for drug tests) -- not by pointing to the medallion owners' super-profits that created the problem.
I suspect the country will see more of this.
(Apologies to the non-US list participants)
Paul Altesman