Why everyone overestimates American equality of opportunity.

When Americans express indifference about the problem of unequal incomes, it’s usually because they see the United States as a land of boundless opportunity. Sure, you’ll hear it said, our country has pretty big income disparities compared with Western Europe. And sure, those disparities have been widening in recent decades. But stark economic inequality is the price we pay for living in a dynamic economy with avenues to advancement that the class-bound Old World can only dream about. We may have less equality of economic outcomes, but we have a lot more equality of economic opportunity.

The problem is, this isn’t true. Most of Western Europe today is both more equal in incomes and more economically mobile than the United States. And it isn’t just Western Europe. Countries as varied as Japan, New Zealand, Singapore, and Pakistan all have higher degrees of income mobility than we do. A nation that prides itself on its lack of class rigidity has, in short, become significantly more economically rigid than many other developed countries. How did our perception of ourselves end up so far out of sync with reality?

IN THE 1830s, Alexis de Tocqueville wrote that, in notable contrast to the “aristocratic nations” of Europe, the United States was a place where “new families are constantly springing up, others are constantly falling away, and all that remain change their condition.” Karl Marx sounded a similar note in 1865 when he observed that “the position of wages laborer is for a very large part of the American people but a probational state, which they are sure to leave within a longer or shorter term.” But it was two American writers who probably did the most to shape our country’s self-image as the land of unbounded opportunity. They were Horatio Alger, of whom you’ve probably heard, and James Truslow Adams, of whom you probably haven’t. When Alger and Adams were alive—and also, for that matter, when Tocqueville and Marx contributed their observations—American opportunity was a much closer match to their superlatives than it is now.

Alger wrote Ragged Dick (1868), Luck and Pluck (1869), and other dime novels for boys about getting ahead through virtue and hard work. To call these books popular would be an understatement; fully 5 percent of all the books checked out of the Muncie, Indiana, public library between November 1891 and December 1902 were authored by Alger. Adams was a more cerebral fellow who wrote books of American history. His influence stems from the fact that one of these books—The Epic of America (1931)—introduced the phrase “the American dream” to our national discourse. Writing at the start of the Great Depression, Adams envisioned not “a dream of motor cars and high wages merely,” but rather “a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Born half a century apart, neither Alger nor Adams could claim to have risen from the bottom. Both came from well-established families whose American roots dated to the early seventeenth century. Alger could trace his lineage to three Pilgrims who in 1621 sailed to Plymouth Plantation on the Fortune, the second English ship to arrive there. Adams—no relation to the presidential Adamses—was descended from a man who arrived in Maryland in 1638 as an indentured servant and, within three years, possessed 185 acres. Alger’s father was a Unitarian minister; Adams’s a stockbroker. Both fathers were men of good breeding and education who struggled to make ends meet but were able—at a time when more than 90 percent of the population didn’t finish high school—to obtain higher education for their sons. Alger went to Harvard; Adams went to Brooklyn Polytechnic and, briefly, Yale. Both sons followed their fathers into the ministry and finance, respectively, before they became full-time writers.