When a bird hits your window, someone you know is about to die

There's a version of American history out there, that's popular with liberals right now (I remember seeing it repeatedly in Salon and Harper's, but I'm sure I've seen other places, too -- its being pushed hard by Thomas Frank, author of "What's the Matter with Kansas?"), that argues that the current growing division between the upper middle class and the blue collar middle class (which is forcing the blue collar class down into the lower class) is a result of Reagan (and Republicans after him) duping blue collar voters into voting Republican against their best economic interests. According to this theory, prior to Reagan, blue collar and white collar workers could both achieve similar levels of economic success (home in the suburbs, good insurance, secure retirement, something about the American dream, blah blah), although the ceiling was obviously higher for white collar workers. After Reagan, though, Republicans twisted the rules of the game in favor of the rich and corporations, at the expense of the blue collar worker.

Here are my questions:

1. I take it as obvious that blue collar workers in the seventies had a brighter future in blue collar work than blue collar workers now do. But, is that because of a shift in governmental policy (per the theory), or because of unavoidable changes in the condition of the marketplace? I would think the answer is "a mixture." So I suppose the question would be, what sort of mixture?

2. The reason liberals posit this history is to suggest that the rules ought to be returned to the way they were before Reagan. Is that possible (or desirable), or have changes in the condition of the marketplace made it impossible to return to pre-Reagan-esque policies? I'd be happy to sacrifice some of the wealth of the wealthy if it could be moved down the economic food chain a bit, particularly if it ended up in the hands of hard-working people. But is that possible? Or would that just produce an all-boats-sink-with-the-biggest-boats-effect?