When the movie archetype of your profession is the maniacally self-righteous Travis Bickle in Taxi Driver, you have an image problem. And when your idea of good PR is manhandling and shouting down Charlie Bird on camera, you're not doing much to improve the image.

The taxi-drivers had already alienated public opinion by persistently blocking the development of the kind of service that is taken for granted in every other developed country. Their aggressive behaviour on Wednesday and Thursday seemed designed to destroy any surviving shred of sympathy for their case.

It is possible, however, to be utterly obnoxious, yet not entirely wrong. For all their collective bullying, most individual taxi-drivers are decent, hardworking and courteous. And for all their failure to provide an adequate service, they are right about two things.

They are being scapegoated for much larger failures of public policy. And the deregulation of the taxi industry has been handled very badly. In spite of themselves, they deserve a hearing next week.

The first thing that needs to be borne in mind is that the taxi service, especially in Dublin, has taken the blame, not just for its own very real failings, but also for the inadequacy of public transport.

Queues for taxis at Dublin Airport, for example, are not caused simply by a shortage of taxis. In any well-planned capital city, there would be a rail link between the airport and the city centre. For all the talk of Luas, this basic piece of infrastructure is still a long way off.

It's the same story with night-time bus services and indeed with public transport during the day. Instead of being an optional extra for those who want a tailored service, taxis have been forced to fill in the gaps where buses, trains and an underground system ought to be.

At least some of the anger directed towards them is generated by the simple fact that a taxi service can never adequately replace a proper public transport network. Even when there are a lot more taxis on the streets, the frustrations of trying to get around Dublin will not go away.

Of course, the way taxis were regulated made matters worse. While a 1998 study by John Fingleton and others for the Policy Institute at Trinity College Dublin suggests that at least 4,500 taxis are needed to meet the demand in Dublin, just over half that number were actually licensed. The cost of the shortfall can be measured not just in long queues, but also in serious safety risks for late-night travellers, more drunken driving and increased traffic volumes.

Opening up the market should lead to real improvements. The experience elsewhere strongly suggests that deregulation does increase the number of taxis and reduces average waiting times. In New Zealand's biggest cities it resulted in at least a 100 per cent increase in the number of taxis on the streets. In large Swedish towns the increase was 16 per cent; in San Diego 127 per cent; in Seattle 33 per cent.

These figures are not quite as good as they seem, however. What tends to happen with deregulation is that hackney drivers take out taxi licences, creating more taxis but fewer hackneys. For the customer ringing a cab company, the difference between a taxi and a hackney is largely immaterial. As hackney drivers acquire taxi licences, the overall improvement, though considerable, will probably not be as dramatic as most people seem to expect.

More importantly, however, even those who have argued most cogently for deregulation of taxi licences have pointed to the accompanying need for greater regulation of standards within the industry. If you open up entry to the industry and do nothing else, the standard of service will fall.

The Policy Institute report notes: "Anything that makes the market more keenly competitive will increase the incentives of suppliers to skimp on quality. Thus one would expect deregulation of price or entry to lead to a reduction in standards if no change in standards was made."

In other words, opening up the taxi industry without at the same time imposing quality controls will create an abundant supply of poor-quality taxis. To avoid this, deregulation at one end needs to be accompanied by more regulation at the other.

As the Policy Institute report puts it, "Deregulation of entry would need to be accompanied by measures to ensure quality standards and efficient organisation of the market". In his haste to achieve a short-term political victory for the PDs before Christmas, Bobby Molloy seems to have paid no attention to these concerns about quality.

One of the things that happens in a more competitive deregulated market, for example, is that taxi-drivers don't turn up for relatively short and less profitable jobs when the opportunity of a more lucrative job arrives.

Another is that you get drivers who may not know the routes or may not even speak the language. To avoid these problems, deregulation elsewhere has been accompanied by greater powers of enforcement for the police or licensing authorities.

In London, anyone seeking a taxi licence has to pass the formidable Knowledge test, which requires a detailed grasp of the city's topography. In New Zealand most drivers have to attend a taxi academy.

Here, the Policy Institute report recommended that deregulation should involve "regular monitoring of both driver and vehicle standards", focusing "not just on technical standards but also on factors that affect the comfort and hygiene of vehicles and the knowledge and interpersonal skills of taxi-drivers".

Yet there is no evidence that Bobby Molloy's Big Bang deregulation is going to have these necessary safeguards. In a context where, even under the old system, it was possible for a high-profile sex offender like the man involved in the infamous X case to end up driving a taxi, this absence should be alarming.

There is, finally, the issue of compensation. Taxi-drivers may have no legal claim on the State simply because they paid huge sums in a black market for licences. But it was the State that created that black market with the introduction of regulation in 1978.

There is, however, one important qualification to the case for direct compensation for those who paid up to £80,000 for a taxi plate. Those seeking compensation should be required to produce evidence of who the money for the plate was paid to, and the names of the beneficial owners of the plates that were sold should be traced and published.

That way at least the taxi industry could make a new start, free of suspicions about how it got into such a mess in the first place.