(1) The problem is old. And well known.

(2) We also know a number of effective, tried and tested ways to do something about it and address this head-on.

(3) Isolationism may reduce personal frustration, but it certainly is not a constructive step towards preventing really bad things from happening (which is what we all want to).

If I had to condense all I know by now about denial in a few sentences, that would be:

(1) There is a scientific theory that has strong experimental support, Leon Festinger’s theory of “cognitive dissonance”. But this just encodes in scientific language what Buddhists have known for a long time about “attachment”. (Basically: The more you emotionally invested in an idea, the harder it becomes to let go. Things get really bad if it became part of your self-image.)

(2) The human mind is wired up in such a way that it inevitably does a lot of pre-processing of incoming information at different levels. (Optical illusions can teach us a lot about that.) Interestingly, it also is wired up in such a way that, whenever it is confronted information that might be able to endanger a positive self-image, it can temporarily suspend both logical thinking(!) as well as memory. This is a mechanism by which the conscious mind protects itself very effectively from feedback that it is not as important as it tries to make itself believe. An extremely powerful illusion, actually.

(3) Different people suffer from this to a different degree. Just as there are people who can “see” stereogram images and people who cannot, some are able to not only understand the mechanisms underlying self-deception but also apply that to their own situation, while others cannot overcome it.

(4) As “everything works in both ways”, it is indeed possible to actually turn the problem into an advantage. How? If self-deception and denial is the root cause of your problems, get active and behave in such a way that (A) those who do not seem to get the message cannot avoid being confronted with your contradicting behaviour, (B) your behaviour does not leave them with any opportunity to find a cheap excuse for not having to look into your position on the issue, and (C) if they try to stay in denial by using force to avoid facing the issue, then this immediately creates a strong inner conflict for them, as they on the one hand try to believe to be the good guys, yet on the other hand get the immediate direct feedback that they are the only ones causing harm. No one can stand such massive dissonance for long, and the more one suffers from self-deception, i.e. the stronger the need to maintain a positive self-image, the more susceptible one is to yielding to this inner conflict.

Indeed, I would call this the one missing puzzle piece of Permaculture as it is done and taught in the present: understanding some important characteristics of the species Homo sapiens sufficiently well to utilize this for the design of conflict resolution strategies. With regard to this issue, Gandhi shows the way, and successfully demonstrated dozens of times the superiority of this approach to overcoming both denial as well as violent conflict.

I recently gave a number of courses on self-deception and related issues, see e.g. http://nmag.soton.ac.uk/tf/talks/seminar-pdfs/. If you want an accessible introduction, then two books that I would consider a must-read are “Mistakes were made but not by me” by Carol Tavris and Elliot Aronson,
as well as the biography “The life of Mahatma Gandhi” by Louis Fischer.