But it also might not, and it’s very difficult to determine the extent to which it is true or not.
This means that it amounts to a belief, rather than a fact. My own belief is that this view is partly true, but that it is less than half of what we see in recessions.
On the other hand, a great deal of what we see in recessions appears to be coordination failures: people are willing to work, firms are willing to hire, but they can’t get together and satisfy each other. It ought to happen, but it doesn’t.
I also think we tend to de-emphasize the amount of bad luck that others may have had, or good luck that we might have had.
I think those two ideas are dominant.
Having said that, I don’t think we should suppress the creative destruction aspects of recessions, by say, keeping GM in business.
I raise this point about the exam, because claiming that recessions are mostly creative destruction is getting very close to saying that the unemployed deserve their situation. I think this is true during the latter half of expansions when the economy is booming. But … I don’t think it holds during recessions or the early parts of expansions.