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How has the GOP been able to sustain the myth of the American Dream in light of these developments?
People want to believe pretty myths, and an alarming % of people will believe that their left big toe is a monkey's butt if they are told it is often enough by people they consider to be authorities.
Why has the class warfare argument been so successful?
For the same reason the "conspiracy theory argument" has been so successful. Dismissives such as "class warfare" or "conspiracy theorist" are social engineering techniques used to indicate that nothing the opponent says or might say has or can possibly have merit. This serves as a smokescreen to hide the reality that the dismissers have no, or weak arguments. Neither will work unless the audience, those listening to the two debaters, are poorly informed and intimidated by the dismisser, which is usually the case.
How can we best shatter people's illusions with the truth?
I'm not sure you can, since the people with the illusions tend to be people for whom "truth" only comes from those they perceive as being "on their side," even when the entities in question are obviously NOT on their side. Look at all the people on here who refuse to believe news stories unless they are confirmed by "western sources." Can true democracy thrive in such an economic climate?
Of course not, but if most of the people believe it is democracy, and believe they are middle class even though they can't afford medical care, that is irrelevant.
What steps can Democrats take to reverse these trends?
Even if "Democrats" wanted to reverse these trends, which is far from a given, the situation has passed the point where a political solution is realistic. It is hard to find an instance of a feudal society in which the lords voluntarily relinquished power to the serfs.
Is it really necessary to have a more egalitarian society or is social Darwinism acceptable?
Feudalism is not even true social Darwinism, the "American Dream" myth has more in common with social Darwinism - those who work hard will receive the reward, etc. In a feudalist or caste society, how hard you work does not matter. Whether either is desirable or necessary depends on the goal, and on whom you ask. Feudalism is unarguably more profitable for the lord than a more egalitarian society, and the more egalitarian society is unarguably a better deal for the serf.
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