false assumptions and paradigm shifting that reverses the roles of cause and effect
That's just it, there was no cause nor effect, reverse or otherwise.
First, the expansion of the China deficit in the '90's coincided with record job growth,
the record job growth included real wage increases for all strata of society,
and you said:
Frankly, the only "class warfare" I see portrayed in the graph is the economic warfare perpetrated by the top 20% upon the prosperity of the American Middle Class.
Furthermore, I see nothing wrong with "envy". That's a perfectly normal consequence of natural human motivation to improve their own economic situation. The ONLY time economic envy becomes problematic is when (as you advocate) economic prosperity becomes perceptably disparate and divergent. Motivation for self-improvement becomes frustrated, and socio-economic unrest and upheaval results.
And it still looks like we're better off now than before regardless of the China deficit.