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I think you’re correct that it’s a selfishness problem more so than a trust problem (the trust problem is developing as a response to the selfishness problem. And I think the cause or at least a major cause of selfishness has little to do with government, but more to do with atomization.
Communities, civic pride, and rootedness in a place have all declined rather rapidly over the course of the last 50 or so years. People don’t stick around the same places, the don’t keep the same jobs, they don’t form deep lasting relationships with people around them. And without a sense of tribe, a lot of pro-social behaviors don’t make sense. Why return a lost wallet when it belongs to someone you don’t know, and you’re not going to get social credit for doing the right thing anyway? Why not cheat Red Lobster? Do you know the owner? Do you worry that friends and neighbors will notice you cheating the system? Even if they do, what social control is there that they could leverage to shame you? Or on the negative end, who in your area knows or cares if you never contribute to society? If you decide to do nothing but game and eat? Who’s going to shame you for being a burden on your family or the government?
The thing that jumps out at me about the so-called high trust societies is the degree of social conformity and shaming that happens in them. There’s a shame to not working hard in those societies, but it’s not the theoretical “grind-core” thing like we have, it’s people you work with (and might work with for decades) noticing that you leave early all the time. Or noticing that you’re not producing as much as they are. In social relationships, they’re close enough that you’ll be shamed if you do something that the society sees as wrong. And the informal social credit system works pretty well most of the time, producing the kinds of pro-social behaviors we actually want. If you want divorces to go down, having a lot of negativity around getting a divorce AND having a network of people willing to gossip and shame you for getting a divorce keeps most people together.
I think shame works for the most part, and the loss of it makes trust-breaking a much more rational decision than it would be in a shaming culture.
You could ask the same question of people in Tokyo who do return wallets.
Collapsing this to a question of incentives is missing the point entirely. People who return wallets are not following incentives because the incentive is always to defect.
The Japanese literally have several words for the different gradations of these people.
Your model of high trust societies seems lacking.
I don't think it's about shame, but it's absolutely about incentives. In a society that reflects you, where everyone has had a similar upbringing to yours, probably looks somewhat like you, has gone through roughly the same events as you, you can reasonably expect your neighbor to act approximately like you.
So in that kind of society, the incentive to be the kind of person who returns a wallet is that you get to live in a society that would likely return your wallet too.
If your society is not just atomized, but also doesn't reflect you, the link between the action and the incentive is harder to see, and by that token becomes less strong.
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I would argue that they absolutely are following incentives. The close-knit and shame-based culture in which having a reputation as a good person is necessary to do well in life simply changes the incentive landscape to promote pro-social behavior. If I can lose face and thus lose out on opportunities that would otherwise come your way if you were doing the right thing.
Now the part you quoted I was actually talking about American society in which everyone is highly mobile and atomized and in which you aren’t shamed for being anti-social. In America, even if someone found out you keep the wallet, you don’t face the prospect of having that information follow you around. You don’t develop a reputation because you aren’t likely to stay in the same place and do the same job around the same people. And honestly the fact the the Japanese have so many words for people who do bad things kinda supports my idea here. Social shaming works to promote pro-social be happy especially when a person is rooted in a community long enough to develop a reputation.
You are missing out on the fact that nobody will know if you don't return the wallet in Japan. Japan is even more urbanized than the US (90%+). Most people live in huge cities where they are just as atomized as any rich low trust society. That's why old people die in their apartments and are not discovered until the stink of their decomposing bodies makes them known.
As for NEETs, until 2004 the US had higher prime age labor force participation rate than Japan. https://data.worldbank.org/indicator/SL.TLF.ACTI.ZS?locations=JP-US
I guess Japan invented social shaming for NEETs 20 years ago?
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I don't think the trust problem is a response to the selfishness problem, because just saying "people are being selfish" has no explanatory power. Are people more selfish because of genetics? Have all the selfless people selected out of the gene pool?
On the other hand, if you present selfishness as a rational response to a society that they don't trust will repay pro-social behavior, you get a lot further with explanations that match observations. Trust is downstream of shared identity, experience and culture (see: Robert D. Putnam's Bowling Alone). If I think of my fellow citizens as being somewhat similar to me, I can easily imagine them coming to the same pro-social conclusions as me. Shared identity, experience and culture are impacted negatively by multiculturalism and by emphasing diversity. Hence why high trust societies are typically homogenous societies.
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