The problem with heavy government involvement in any industry is not that it's inherently bad, but that if it is bad, it is very, very hard to change. With minimal good regulation on transparency and accountability (I did not say no regulation,) consumers can quickly vet good providers.
New York is lucky in that it has reasonably good regulation on taxis, though far from perfect - there are many underserved areas for which there is no incentive for taxis to service, and where it is illegal for other parties to service. Along with service at peak times, New York would benefit from eliminating the medallion system and instituting a simple regulatory framework where anyone with appropriate training and licensing can provide taxi service.
Uber is an example of good quality taxi service without (or circumventing) regulation, as is Lyft and the other startups. The negative consequences are obvious simply by looking at the market opportunity and demand for fixes to the broken taxi system. San Francisco suffers from insufficient taxis and an inability to adapt to demand.
The purpose of the regulations has become primarily to protect taxi unions and companies by limiting supply, not to promote safety or prevent fraud.
