Obsolete business models die. It's unfortunate when their employees can't cope with the stress of losing a job, but what are you going to do? Have the government step in and subsidize a dying industry at the expense of superior competition? The whole medallion system is idiotic and anti-competitive in the first place, and the idea of expanding it to kill off competition is absurd.
The real problem is that people are gullible enough to take a job where you, on average, pay money for the privilege of working and funding someone else's profits. If these drivers actually did the full analysis on their expenses, including fuel, deprecation, maintenance, etc, they'd often find that their hourly pay is below minimum wage, and in many cases negative. If the employees of these companies had more sense about it and refused to work without proper compensation their cost vs. conventional taxi services would probably be a lot less impressive.
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