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How would you feel if something you couldn't change about yourself was used by your peers as an insult? You really don't see how using the word "retarded" as a stand-in for "stupid" is still an insult to people with mental disabilities? If someone was acting stupid and you said they were acting "like a Chinese person" that's still insulting to Chinese people even if the person you're targeting isn't Chinese.

Also I'm calling shenanigans on "the 1980s definition". I am the same age as you and I was taught it was cruel to use the word that way back then.