This is a 'What If' story written by Frank Miller.
You have to look really hard for the clues as to what happened (its a little better in Miller's graphic novel) but its there as well in this story.
The "normal" people eventually rejected the supers because of collateral damage and just being so darn awesome.
I don't remember the quotes exactly but the two that really say this are both spoken by Superman and go something like:
Superman: This is their world Bruce and they don't want us in it.
Superman: We must not remind them that giants walk the earth.
Superman and the "Government" (personified by Ronald Reagan) always get a bad rap in this because people always seem to see Reagan as some kind of ultimate Master Mind Villain and Superman as his enforcer/stooge. The reason for this is because the genera is '4-color comic book' and we are used to painting people in white and black hats. But Miller is more subtle than that.
The truth is a lot deeper and more cynical (and a lot less satisfying for most comic book readers). The people, the average Joes (aka...US), are the ones who rejected the supers and demanded their retirement or elimination. From that desire, a government rises up that supports their ideas and moves to eliminate the supers. Superman, a pinnacle of "Truth, Justice and the American Way" by his very nature will honor that desire and supports the people by making his activities less visible and "encouraging" the other supers to retire...This is "not reminding THEM that giants (the supers) walk the earth".
Its also implied (rather blatantly) that the Green Arrow refused and Superman cut his arm off to "persuade" him a little more strongly...thus his desire for revenge.
Batman, on the other hand, at the beginning of the story, can not accept operating in the shadows (a true irony of his characters is that, given that his style is stealth, his persona is all about a grand stage and a lecture to the public) and so he returns to his overt ways and, eventually, Superman is brought back into play. At first its to try and talk some sense into Bruce and then, when that fails, to "persuade him more strongly".
Bruce, of course, knows this and has been planning that fight for more than 20 years.
The brilliance of Miller's work here is that both characters are exactly the way they have always been depicted in the comics (neither are "bad guys"). Its just that, for the first time, the driving force of each character's personality is in direct conflict against each other. From one perspective or another, both are "good guys".
Gorden's speech about if FDR knew the Japanese were going to bomb Pearl Harbor is about the most important piece in the entire graphic novel because it is really Miller's message. Are terrible acts sometimes necessary for the greater good? And every major character in the story struggles with this very message throughout the piece.
Its really a masterpiece.
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There are 10 kinds of people in the world, those who get binary and those who don't.
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