In many ways, taxis are the most visible and widely-known example of micro-entrepreneurship. Oftentimes, the entire business involves (usually) a man buying or renting a car, and working as many hours as he can to turn a profit on top of car payments and fuel. In the same way, Russia’s new regulations on taxis and taxi drivers can be seen as a microcosm of the way the country’s centralized and top-down approach to business policy hurts entrepreneurs and threatens job security in a country already rife with unemployment and limited prospects.
As reported by RFE/RL and the Moscow Times, taxi drivers throughout Russia are protesting new regulations from Moscow, which are due to come into effect September 1. These include requirements that taxis be painted a certain color and be equipped with meters and identifying lights on the roof and sides. Furthermore, they will require licenses for taxis themselves, rather than taxi drivers.
Drivers complain that, especially outside of major cities, these requirements are unnecessary and prohibitively expensive. According RFE/RL, “equipping and painting their cars will cost them 50,000 rubles ($1,700) each” and the repainting will decrease the resale value of the cars. In an industry with razor-thin profit margins, these rules may force many drivers to abandon their jobs or ignore the regulations, risking legal problems in the future. To make matters worse for drivers, Moscow has tasked each region with implementing the new regulations without specifying how they are to do so. This may mean that as of September 1, it may be impossible for taxi drivers to fully comply with new laws, even if they wish to do so.
Moscow’s approach to updating taxi regulations merely represents a deeper issue with the regulatory process in the country which affects all aspects of business.
While new rules may indeed be needed to ensure that passengers are safe and do not fall prey to unscrupulous drivers charging exorbitant rates, a reform process that does not take into account the views of those who will be affected by them is likely to produce results that create as much harm as they do benefit.
The harm is compounded by lack of communication between federal decision-makers and regional level bureaucrats who must implement decisions. This situation gives local officials a great deal of discretion in enforcing the rules, creating a breeding ground for corruption. As always, the answer is developing clear legislation through a transparent and inclusive policy making process.
Through coalitions, such as those in Russia which CIPE supports in their efforts to reduce corruption, businesses — including individual taxi drivers — can use the power of collective action to make their voices heard and demand access to the policy making process. In order to build a functioning and effective economy, Russian leaders will need to do a much better job of listening to the citizens they are meant to serve.
Published Date: August 15, 2011