The first theory I would like to respond to, is the theory that the evil displyed in the Holocaust has so deeply affected the national psyche that "escaping" to a fantasy world is considered "too easy":
AI find this argument unconvincing. FIrstly there is the underlying assumption that all fantasy writing must grapple with the question of good and evil on a cosmic scale. Plenty of good books deal with far more common themes - greed, growing up and just good old love stories. Secondly even were we to accept the assumption, one could easily argue that the Holocaust would be a catalyst for escapist fantasy. Alternatively - Jewish philosophers have written endlessly on the Holocaust, and so there is no reason to think that literature can not.
side from an aversion to medieval nostalgia, there is a further historical reason why 20th-century Jews have not written much fantasy literature, and that is, inevitably, the Holocaust. Its still agonizing historical weight must press prohibitively upon Jewish engagement with the magical and fantastical. It is not that fantasy writers must be innocent naifs. Tolkien and Lewis were deeply influenced in their portrayals of evil by what they knew of 20th-century political barbarity. As Shippey notes, Tolkien especially grapples in his novels more seriously than many supposedly more sophisticated modern literary works with the evils of the twentieth century. Nevertheless, for Jewish writers working after the Holocaust, classical fantasy must have made redemption seem too easy. Certainly, the notion of magic and wizards existing in our own world—as in, for example, the Harry Potter books—becomes all but impossible. (Or at least must raise the question of why Hogwarts, like the FDR administration, never tried to bomb the railroad tracks.)
The second interesting theory suggested in the article is that Judaism as a whole is less sympathetic to magical elements:
The Jewish difficulty with fantasy is not only historical and sociological. It is theological as well, and this has to do with the degree to which Judaism has banished the magical and mythological elements necessary for fantasy.
To put it crudely, if Christianity is a fantasy religion, then Judaism is a science fiction religion. If the former is individualistic, magical, and salvationist, the latter is collective, technical, and this-worldly. Judaism’s divine drama is connected with a specific people in a specific place within a specific history. Its halakhic core is not, I think, convincingly represented in fantasy allegory. In its rabbinic elaboration, even the messianic idea is shorn of its mythic and apocalyptic potential. Whereas fantasy grows naturally out of Christian soil, Judaism’s more adamant separation from myth and magic render classic elements of the fantasy genre undeveloped or suspect in the Jewish imaginative tradition. Let us take two central examples: the magical world and the idea of evil.
Christianity has a much more vivid memory and even appreciation of the pagan worlds which preceded it than does Judaism. Neither Canaanite nor Egyptian civilizations exercise much fascination for the Jewish imagination, and certainly not as a place of enchantment or escape. In contrast, the Christian imagination found in Lewis and Tolkien often moves, like Beowulf or Sir Gawain, through an older pagan world in which spirits of place and mythical beings are still potent. Nor is this limited to fauns and elves. This anterior world can be dark and frighteningly alien, as Tolkien has Gandalf indicate in The Two Towers. “Far, far below the deepest delvings of the Dwarves,” the wizard says, “the world is gnawed by nameless things. Even Sauron knows them not.”
I agree that certain Jewish theology makes magic more uncomfortable, and yet I dissent that the Jewish world is really so rational that it can no longer sustain a magical universe. One needs only look at the unending rise of segulot, blessings and miracle stories to see that Judaism can live quite comfortably in a supernatural infused world. Furthermore the Aggadic tradition of Judaism is arguably as fertile a magical world as any - including demon kings and queens and magical objects.
I'm afraid I don't really have a good theory of my own. I suspect that the reason Chrisitians write as much about fantasy is related to their deep despair of salvation in this world which naturally leads them to search for a "Magical" solution. However while that may explain why Christians write so much fantasy it does not explain why Jews write so little.