Cynicism Is Near And Far
People seem to find it easier to be idealistic about social institutions and practices in which they are not greatly involved. It seems easier for non-soldiers to be idealistic about the military, for those who do are not teachers or students to be idealistic about school, and for those who are not reporters or interviewees to be idealistic about journalism. It also seems easier for the never-married to be idealistic about marriage.
People also, however, tend to be less idealistic about social institutions very distant in time and space. They think that ancient doctors didn’t help health, that ancient police mostly took bribes, that ancient marriages were raw domination, and so on. They also tend to think institutions in distant nations are similarly dysfunctional.
Many folks succumb to nostalgia, but they usually celebrate moderately old institutions and practices; few are nostalgic for an era thousands of years past. Similarly, many folks are cynical about their family, the company they work for, or the city they live in, and presume things must be better in other nearby families, firms, or cities.
In all this I see an interestingly intermediate near-far effect: We seem the least idealistic, or the most cynical, about things the most near and the most far in time, space, and social distance. We seem the most idealistic about things at intermediate distances. What other intermediate near-far effects can we see?
I'm not sure that your premises are correct. Many people are nostalgic about some very old things which still exist in some form (the Catholic Church, the Imperial House of Japan, primitive hunter-gatherers). They are yet more likely to be nostalgic about recent things because there are more relatively recent things lying around.
Maybe the near-far framework is not the best way to understand this issue.
Picking up from Islander's comment...I think the mechanism is more general than the particular idea of "progress" and "in-group vs. out-group"
For example, for about two thousand years in China, the Zhou Dynasty was held up as the pinnacle of social and political achievement. The earlier Xia and Shang Dynasties were not so esteemed and seen as barbaric at worse or failures at best.
During the Zhou, or at least the myth of the Zhou, formed a central part of what defined China versus not-China. The Zhou were glorified because they defined the "in-group vs. out-group" not just in the space, but also in time.
Similarly, many Americans seem to mythologize the Founding Fathers and the early Republic...whereas many of the liberties and freedoms associated with them were part of a continuous tradition with England.