Living in fantasy land is so much easier than facing up to the economic crisis

Yes, I know it is the election tomorrow. And yes, I am an Epsom voter. And yes, this is all very important. Sort of. Even if, out of all the campaign, the bit I can't get out of my head is that John Banks has seen only four movies in his life. One of the movies is Spiceworld. I couldn't vote for him before, because I think he is a bigot, but I definitely couldn't now.

But despite this election campaign being so utterly thrilling, I find the only thing I can think about at the moment is not John Key or asset sales or any of that, but an article in the New York Review of Books by a writer called John Lanchester, reviewing a new book by Michael Lewis, author of The Big Short. Lewis' new book, Boomerang, is about what he has come to see as the larger phenomenon behind the credit crisis: the increase in total worldwide debt from US$84 trillion in 2002 to US$195 trillion now.

Lewis' thesis is that "the subprime mortgage crisis was more symptom than cause. The deeper social and economic problems that gave rise to it remained." Lewis does financial disaster tourism - zipping around the world finding wacky examples of money orgies in California, Iceland, Ireland and Greece. California spends US$6 billion a year on prisons compared with US$4.7 billion on higher education. "Everywhere you turned, the long-term future of the state was being sacrificed," Lewis writes.


Then there is Iceland. "Say, you have a dog and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks with a billion dollars in new assets." There are lots more bonkers examples.

We all have too much debt - people, councils, governments - to a barmy extent. But that is not what I find most knotty about Lewis' theory. The queerest thing is how out of touch with reality we still are. Worldwide denial. We cling to our optimism that we will somehow figure a way to sort it out. Maybe we can. We are all living a financial lie, but as long as we are all doing it then it makes it easy to justify. Or rather, not even notice we are doing it. We prefer to live in a fantasy land than face up to the painful fundamentals.

This optimism manifests itself in all sorts of perky but flaky beliefs, like the view that anyone can be a rich entrepreneur if they just believe in themselves and do more aerobics. Woo-hoo. Only a few have woken up and they are not the people you would expect. Billionaire Sir Richard Branson this week wrote a piece warning the British Chancellor he is creating a "lost generation" of young people who will never know work, and advocated some drastic policies.

In this country, it is still too much of a buzz kill to address the reality of long-term youth unemployment of 25 to 30 per cent, or how to transform an underclass of people stuck on welfare.

Lanchester posits that this precarious financial soufflé has pouffed up partly partly through a failure of "agency". We feel the decisions that affect us are taken way above our heads, in so much as they are the operation of large economic forces over which we have no control. This is probably true. But sometimes we do have at least a small opportunity to exert our agency.

Tomorrow is one of those days. I just wish I could vote for someone who has woken up.

* Illustration by Anna Crichton: