PRAGUE, Czech Republic -- The invisible hand of the market turns out to be no match for the strong arm of a cabbie, prompting the Czech Republic's free-market-worshiping economists to reconsider their year-old deregulation of taxi fares.
One enterprising driver, according to reports, managed to charge his hapless passenger 8,500 crowns ($258) for a ride of less than a mile. Another drove up on the sidewalk and tried to run down a couple who complained of having been overcharged.
Yet another furiously drove a passenger from his destination back to his point of departure when the passenger protested that the meter was running too fast. Once back, a group of drivers surrounded the passenger until, fearing for his safety, he finally paid the inflated fare and took a bus home.
"In taxi service, we don't have full market forces in effect," sighs Jan Koukal, Prague's lord mayor. "The customer is at a disadvantage to the driver who is providing the service, so deregulation was the wrong step."
Now, City Hall is preparing to reintroduce price regulation, although the mayor acknowledges that without further measures it will be difficult to bring Prague's taxi drivers under control.
"There are a few places where you will be almost certainly be cheated," he says, gesturing out the window of City Hall toward a nearby taxi stand. "These drivers are cheating, they are destroying the image of the city, and I hope that they will disappear from taxi service."
Since the 1989 "velvet revolution" that ended communism here, Prague taxi drivers have earned a well-deserved reputation for dishonesty and belligerence. The situation has gotten so bad that a group of U.S.-based expatriate Czechs -- including Academy Award-winning director Milos Forman -- recently wrote Koukal an open letter asking him to bring the service under control.
Nearly every local resident and foreign visitor can recite a litany of ill-treatment, overcharging and even personal injury at the hands of taxi drivers.
One driver last year was sentenced to three years in jail after he pulled a gun on an Austrian tourist who had refused to pay an inflated fare. In 1994, local newspapers reported that several drivers had installed electric shock mechanisms in their passenger seats. And just this month, two American tourists were savagely beaten by a driver who believed they were crossing the street too slowly.
A year ago, a Czech government trying to deregulate nearly every aspect of economic life declared that ample competition existed in taxi service and that price regulation was therefore unnecessary.
City officials, finding it hard enough to regulate any aspect of taxi service even without opposition from the Finance Ministry, threw up their hands in resignation and simply allowed cabbies to set their own fares, effectively giving drivers a license to gouge.
Under deregulation, drivers may charge as much as they like, so long as they post their prices on the car door. Passengers are also unregulated; they may choose any cab they want, not necessarily the first car waiting at a taxi stand.
But visitors to Prague don't know the system and erroneously assume that all drivers have the same rates. While radio taxis from dispatching companies generally charge about 16 crowns per kilometer (76 cents per mile), a smiling driver in the Mala Strana district was seen the other day helping an elderly German couple into a taxi that had posted rates nearly 10 times as high.
On Old Town Square, the epicenter of Prague's prosperous tourism industry, posted fares range from 200 to 300 crowns per kilometer ($9.69 to $15.50 per mile), although some cabbies post a second rate for Czechs of about 30 crowns per kilometer ($1.45 per mile).
"These guys are a bunch of sharks," says attorney Petr Cech. "They steal you blind and give Prague a terrible name abroad."
Now, in the wake of a Ministry of Finance decision last month to restore to local officials the right to regulate taxi prices, Prague's City Hall is preparing a new assault on the problem. The city council is proposing a maximum fare of 17 crowns per kilometer (82 cents per mile), which should come into effect Dec. 1.
Additionally, Mayor Koukal has asked to get the Czech Parliament to grant the city more power in regulating taxi service. He would like to see stricter standards for licensing -- including a test of knowledge of the city and at least some rudimentary foreign-language skills -- as well as a uniform color for taxis. Furthermore, he wants to see more frequent checks on drivers and, for rogue drivers, higher fines and the threat of losing their licenses.
"Price regulation alone is not enough," says Koukal. "If we have stricter rules, I believe it will improve not just the image of Prague among foreigners, but the service itself."