Today I came across an article that from the point of view of Neo will spell doom and gloom for the economy in the near future. However the Austrian school would view this news as more of an opportunity. Not as a whole economy picking up again like an engine starting up, but several individual catallaxies with a changed set of incentives to begin more productive means. So what is the article about that causes such divergent views between these schools of economic thought? Unemployment Benefits. The article mentions how nearly 2 million unemployed Americans have exhausted their unemployment benefits that last up to 99 weeks and then stop. For Neo this means a disaster. What will prop up aggregate demand? Surely those that no longer have the benefits can no longer buy anything so the economy will fall back into recession.
Yet I think Austrian economics would ask. What are those individuals going to do? A person running out of those benefits must be a scary thing, and their way of life is going to change it must change if they want to continue living. While not every person will react to these scenarios the same. Some will seek to find other ways to gain from the system of redistribution through things such as food stamps, and others still may go out and seek to use force to gain a living which we remember the government has a monopoly on making it an illegal action. While these may play out I certainly hope not. I view a much different possible scenario, one much more hopeful and positive.
Many of the unemployed will see that for their own individual means that they must invest in themselves and get training, education, or a new set of skills that are in demand. Others may have ideas that they have had a while to collect will want to try their hand at moving resources to some use one that can bring them a living, and therefore what others would exchange for. In being an entrepreneur they would begin creating a more productive set of circumstances and allow for them to not only have a way of life but also to employ others who may not have the risk taking ability. So in many ways the developing situation may be just what is needed to bring unemployment down by offering a new set of circumstances the incentives also change. The pressure to actually do something besides receive a check for being unemployed applies pressure to be productive in society. This increased productivity is just what is needed to improve the outlook for a conglomerate of catallaxies.