Bullshit. Those groups defend the laws, but they don't exist until the laws are passed. Licensed taxi drivers are a creation of regulation, not the creators of it.
The laws get created because enough people get ripped off, killed, and otherwise hurt by a completely unregulated marketplace that politicians feel the need to take action. The environment and circumstances in which the regulations were passed are so long ago that knee-jerk libertarians can claim, with a straight face, that they really believe that someone with a medallion lobbied for a law calling for the creation of the medallion system, knowing nobody will actually be able to recall the real reasons.
In the majority of cases, the laws make sense and are obvious to anyone looking in that they have little to do with protecting monopolies.
- To reduce the risks of accidents, most taxi regulations generally impose requirements on the skills and abilities of drivers, though frequently these aren't more than those required to get a driving license to begin with.
- To prevent a taxi driver's mistake causing untold harm to a client who ends up an accident victim, taxi drivers are generally required to carry more insurance than normal.
- To ensure the taxi provides a predictable level of service, and hence avoid clients being ripped off, taxi drivers generally are required to implement a standardized fare schedule, and usually have to pass certain tests about knowledge of local routes.
In rare cases, there may also be a quota system to prevent an overload of taxis. At a surface level, this might seem like an attempt to enforce a monopoly, but in fact it's usually the result of city commissioners trying to regulate traffic in general. The poster child for the this kind of regulation is New York City. You can pretend, if you want, that the problem with NYC is that there are too few taxis as a result of the medallion system, but, well, I've been there. Those photos you see of a typical Manhattan street clogged in all lanes by nothing but yellow cabs? Those aren't staged.
So no, licensed taxi drivers did not create the licensing system. Insured taxi drivers did not demand to be insured. Trained taxi drivers did not demand training requirements. And the Linux kernel never created Linus Torvalds.