Deregulation Gives Rise to `Taxi Problem'

SWEDEN'S privatization process, affecting everything from banking to car inspections and day care, is hitting some rough spots and shows that the efficient, socialist-minded Swedes are not above a little greed.

Taxis have been deregulated, which means more taxis and more competition. But lower fares? Not always. The unsuspecting visitor arriving at the airport can find himself paying 500 Swedish krona ($70) or more for the ride into the city. The meter is used, and it all looks official.

But many cabs in Stockholm sport signs offering the same ride for 250 krona, and hotels know to get the best-priced cabs for their guests.

The uncustomary cowboy capitalism has Swedish officials wincing and promising to protect visitors. What is widely referred to as "the taxi problem" has also become a touchstone by which Sweden's reform is being judged by advocates and critics of the deregulation process.

"It's one example of the difficulties that can arise when you go ahead with deregulation without studying the effect it's going to have," says Gunnar Wetterberg, an assistant undersecretary at the Ministry of Finance and a Social Democratic economist. "It can end up more costly than before."

Such criticism ignores the fact that the 250 krona fare is lower than the old standard price, counters Olof Ehrenkrona, director of planning in Conservative Prime Minister Carl Bildt's office. "And we never claimed there wouldn't be difficulties," he says, adding that the government is trying to get airlines to advise their arriving passengers on taxi fares.

That appeals as a private-enterprise solution. But if the wild fare discrepancies continue, some critics say the government is going to have to step in. And regulation could again become the norm.