Quote Originally Posted by Adrian II View Post
So how exactly do we regulate this market thingy to make it work in the interest of policy goals that society considers necessary or desirable, but without impeding either fairness (i.e. fair competition) or the profit motive of market parties?

My example is clear enough, right? The U.S. government wants affordable housing for people with a minimum income of 'X'. Since the U.S. government does not want to take upon itself the role of mortgage bank, it seeks to regulate financial markets in such a way that mortgage banks wil fulfill this target.
That is my point though. If the government want to achieve certain goals, then it MUST do so itself, it cannot give the responsibility to private companies, for all the reason you have stated...

So the US government wants affordable housing for people with income x, which the "normal" market doesn't give? Then they have to set up their own mortgage bank for that purpose.