The New York Taxi and Limousine Commission will hold hearings Wednesday on a proposal to issue 900 new medallions. The city has already commissioned and recently released a 235-page draft environmental impact statement assessing the potential effects of the move on matters like traffic and air pollution. But the hearing, and the environmental report, seem likely to treat only glancingly the question at the core of the issue: What is the city government doing regulating the number of taxis in the city?

Were the city government to try to set, say, the precise count of shoeshine stands or stockbrokers or sushi bars that should be allowed to exist in the city, the hubris would be laughed at as an exercise in failed Soviet-style economic planning. The way we decide the number of businesses that exist in these industries is by letting people who want to get into the business try and either succeed or fail. Yet the city’s taxi industry is governed by an archaic 1937 law, the Haas Act, that limited to 13,566 — or 13,595, accounts vary – the number of taxicabs in the city. The result is a historical quirk. In 1931, before the Haas Act, the city had 21,000 taxicabs, according to statistics in the “2003 NYC Taxicab Fact Book” by Schaller Consulting. The city’s population at the time was about 6.9 million, according to the census. Now, 70 years later, the city has 1.1 million more people and about 9,000 fewer taxicabs. This is not progress, as anyone who tried unsuccessfully to hail a cab New Year’s Eve can attest.

The Taxi and Limousine Commission wants to increase the number of outstanding medallions to 13,087 from 12,187, in tandem with a rate increase. But not the highest-price environmental consultants nor the most politically connected political appointee can give a convincing, straight-faced explanation of why the number of taxis in the city should be set at 13,087 rather than, say, 13,086, or 14,014, or 13,566, which seemed a reason able number back in 1937.

You don’t have to be a wild-eyed free-market purist from the Cato Institute or the Reason Foundation to question the sense of a government-set limit on the number of taxi medallions. Even the New York Times, not usually a rabid foe of government regulation, editorialized back in 1989, “the goal must be to eliminate medallions altogether and let anyone who meets qualifications go into the taxi business.” Advised the Times back in 1986: “let the market determine the proper number of taxis on the street.”

Defenders of the medallion system — that is, the taxi companies and owners — are politically active and lavish with campaign contributions, while the taxi riders are less organized. The defenders of the current system make the case that many of the medallions are owned by immigrants and by hardworking small-businessmen who paid hundreds of thousands of dollars for them and would suffer devastating financial losses were the present system to be abruptly dismantled. But that’s an argument for a buy-out or a phased transition, not the adjustment in medallions that the Taxi and Limousine Commission is proposing. Defenders of the status quo also cite a 1993 study by Price Waterhouse of taxicab deregulation in 21 cities. That study’s credibility suffers from the fact that it was paid for by the taxi industry. But even that study acknowledges that deregulation tended to increase the number of taxicabs available to riders.

One of the reasons that a lot of voters pulled their levers for Mr. Bloomberg in the first place is the hope that his enormous personal wealth would insulate him from political pressure of the type wielded by the taxi industry. The mayor is known for commuting by subway, though he might prefer a cab, if he could get one. He could give a lift to all New Yorkers if he used the upcoming hearings before the Taxi and Limousine Commission to take on the medallion system.