Alex is right:

The debate over the economy occurring within the Westminster bubble may now have become completely detached from anything that is happening in what the rest of us would recognise as the economy...The everyday "reality" as it is experienced by the rest of us has ceased to be relevant to the debate.

But I wonder: is the problem here merely one of economic illiteracy, or is it also one of political illiteracy too?

Here's what I mean.

The reason why many of us fear that deficit reduction is infeasible lies in the paradox of thrift; if enough people try to reduce their borrowing at the same time, the result isn't lower borrowing, but lower incomes.

This paradox, though, is a particular example of a general problem - that, sometimes, individuals' plans are incompatible: we can't all achieve what we want, even if each of those plans is reasonable in isolation.

It is this problem that makes politics necessary: politics is what happens when I want a quiet night in and you want a party.

However, there is a widespread failure to appreciate this. There is, as I've complained, a blindness to the problems of collective action. Such imbecility reached its apogee in 2012, when David Cameron said, during the threat of a tanker drivers' strike: "If there is an opportunity to top up your tank if a strike is potentially on the way, then it is a sensible thing if you are able to do that." This failed to see that what was sensible for any individual would merely have led to queues, panic buying and shortages if everyone did it.

It would, however, be unfair to blame the Tories alone for this. In the public mind also, politics has ceased to be a matter of organizing our affairs to minimize conflicts and become a narcissistic display of self-righteousness. And of course, in the media politics has always been about Nick Robinson-type Kremlinology of who's up and who's down as much as about fundamental political questions.

This, I suspect, explains why Cameron's talk about the "nation's credit card" has been accepted by voters and the media: people can see that it's feasible for them as individuals to pay off their credit card, but don't see that it might not be so easy for an agent as big as the state to do so.

It also explains something else. All of us who have both brains and hearts knowthat our biggest economic problem is not the deficit but falling real wages and (not unrelatedly) mass unemployment.

However, in an age of narcissisism, this problem has become individualized: "You want a job? Look for one." "You want a pay rise? Get a better job." This is, of course, embodied in government policy aimed at making work pay.

The error in this approach is obvious once we ask the foundational political question: are plans compatible? Of course, any individual might well be able to improve their lot by better job search. But if we all did so the result would be merely falling wages (at least temporarily) as labour supply increased and frustration because the demand for labour falls well short of supply.

In this sense, therefore, the elevation of "the deficit" over the problem of low pay is not just economic illiteracy but political illiteracy too - a failure to see that is politics is (or should be) really about how to arrange affairs so as to make individuals' reasonable plans as compatible as possible.

This is one reason why economists such as me, Simon and Paul Krugman (I apologise for putting myself into such elevated company) are drawn into politics. It's because our economic problem is a fundamentally political problem - and people have forgotten what politics is.