From Costly Clarity to Costly Chaos

Taxis in Finland used to be a nice little monopoly business with maximum prices for trips, and tons of regulations that limited the numbers of taxis, stopped any form of competition, and even gave tax benefits for taxis. Naturally every lucky taxi owner made plenty of money because they all charged the highest possible price and sat like kings in the big Mercedes! Not even the government could get cheaper services or lower taxi fares for transporting their weighty bodies to important meetings. They “had to pay” the full price, like the school children, elderly patients and other folk, who had to use taxis to get them to the school, health center or hospital because there was no other form of transport, public or otherwise, available.

This was the neo-liberal dream of business – a natural monopoly that gave the owners the best possible returns…. And if the taxi owner was a little tired, he could employ some low-cost student or pensioner to take over his work. The advent of GPS navigation and mobile networks made this even easier.

But this neo-liberal dream was shattered by two events in Helsinki- the appearance of Uber and the appointment of a new Minister of Transport in 2015, a lady who thought she was god’s gift to Finland. She was so much in love with innovation for innovation’s sake that she decided to create competition in the taxi market. She claimed that her reforms would improve service and reduce prices. She rushed through reforms at top speed without giving much thought to the final consequences. Limits of taxi numbers were eased and new types of taxi companies were allowed and pricing was no longer subject to maximum rates.

 

In the first few weeks prices eased a little and then started to increase. Taxis for public services started to not arrive as more taxis crowded into urban areas leaving clients in the countryside with fewer taxis. Customers started to find that they had to use multiple apps to find a taxi – and prices continued to soar.

Taxi owners started to remove taxi meters from their cars or started to turn them off… money was passing hands without being reported to the tax authorities.

The result has not been good and the irony is that the most awful neo-liberal minister in the whole government had destroyed a private natural monopoly and created a chaotic messy system that did not come anywhere near to what was promised.

It is no wonder that the Center Party lost support from voters. This Transport Minister made many disastrous calls during her four-year tenure and after each mishap the then Center Prime Minister, a religious man, gave his full support for his luckless minister. His support has cost him and his party dearly, while she has hopped off the political wagon and joined the board of a Swedish bank. Heaven help them at that bank – as it says in Luke 23, “Father, forgive them, for they do not know what they are doing”!

The new government has promised to reform the reform! Let’s just hope that they can avoid the stupid errors made by the last government and by former Swedish governments. In Sweden the same taxi monopoly was broken up by removing maximum fares and allowing more taxis on the road. The result was less dramatic than in Finland because there are now a number of big taxi firms that operate responsibly and actually compete on price, but the major problem there is that there are wild taxi operators who charge outrageous fares to unsuspecting tourists and local passengers. Each Swedish taxi has a yellow sticker in tow languages, Swedish and English stating clearly their fare rates – that is fine for Swedish and English speakers, but… the government there takes the view of “Let the Buyer Beware” of ion Latin “Caveat Emptor”!

Photo: Wikipedia Commons

 

 

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