But you have neighbors downstream who will object to your contaminants polluting their use of the water. Externalities can be efficiently resolved by applying the Coase theorem.[1] Another common objection is that there are certain public services that can only be provided by the state, but we often find in practice that self-interested parties can develop a business model that addresses those needs.[2]

[1] https://en.wikipedia.org/wiki/Coase_theorem [2] http://www.independent.org/publications/article.asp?id=757

> In this 1960 paper, Coase argued that real-world transaction costs are rarely low enough to allow for efficient bargaining and hence the theorem is almost always inapplicable to economic reality. Since then, others have demonstrated the importance of the perfect information assumption and shown using game theory that inefficient outcomes are to be expected when this assumption is not met.

Not so reassuring.

Let's think about a plausible scenario: I run an industrial facility and am secretly dumping industrial waste into the river. My neighbors start getting sick. When they analyze their drinking water, it shows the presence of a bunch of chemicals whose most probable source is my industrial facility. My neighbors realize I'm to blame, and complain to me about dumping chemicals into the water. I say I've got no idea what they're about and those chemicals must be from somewhere else. Obviously I refuse to hand over any records from my facility.

Getting nowhere, my neighbors file a lawsuit. Then we go through a years-long series of lawsuits where I deny any wrongdoing and maybe eventually have to pay some money, although it hardly brings back everyone killed by illnesses my facility caused.

There is such a thing as enlightened self-interest, where you consider not just what's good for yourself in the here-and-now but also whether the likely consequences to you (both natural and social) are going to be good.

Dumping waste in the river may be cheaper now, but won't be if you get hit by a fine, or have to deal with an angry mob at the factory gates, or end up polluting your own drinking water supply.

The problem is you end up having to do a bunch of hedging like this. What if I have a lifetime supply of safe drinking water for my home and I am absolutely positive nobody will find out I'm dumping waste into the water? Or I'm sure I can blame it on someone else? If self-interest is all that matters this is a completely logical course of action (and I hardly need to point out that this isn't just some theoretical thing; numerous people have done just this).

...which is why people spend a significant amount of time dreaming up both incentives and enforcement mechanisms to ensure that it's not in one's self-interest to be really shitty to your neighbors.

It's not a perfect system - in particular, it's reactionary, which means that enough people a.) need to be harmed and b.) need to complain effectively before the broken incentives are fixed. In practice, it seems to work a lot better than societies where people act for the nebulous "common good", which always seems to end up being defined in a way that suits the self-interests of the people doing the defining anyway.

You have a selfish interest in maintaining your society. This includes things like ensuring the less fortunate in your community are fed, clothed, and sheltered, and that you don't destroy the environment in which you live.

But, as we often see, people act against their self-interest all the time.

Given the way people act, I don't know if I can agree with the idea that those things are a selfish interest.

That is a bit of a stretch. Maybe if you believe you'll burn in Hell otherwise.