It is an intelligent libertarianism, albeit a somewhat loopy one, that has libertarianism as an esoteric doctrine so as to benefit from gains from widespread belief in capitalist meritocracy. It also shows Yglesias to be either much more of a pessimist or much less versed in basic econ. than I suspected.
The trouble is, although it is an intelligent libertarianism, it's not a libertarianism in which any libertarian I can think of believes. Cowen's take on "progressivism", on the other hand, was an idealization of the real "progressive".
Most of the really vocal and obnoxious libertarians (e.g. the Lew Rockwell crowd) do not believe in an intelligent libertarianism, but those whose libertarianism is intelligent believe something quite different than Yglesias's sketch. They do believe that growth makes most concerns about the justice of the current distribution misguided. (Considering the sum of wealth to be static is perhaps the unifying error of left-wing thinkers from Rawls forward.) But they also believe that people can or ought to be able to get ahead by doing well for others--that laws and regulations ought to be ordered to bring this about--not that people merely derive benefit from believing this. Think, for example, of Mises's remark that profit is obtained by doing in the marketplace what others want.
There is, of course, more to any intelligent libertarianism (e.g. Richard Epstein's, Will Wilkinson's) than this, but it's fairly common.
A remark at the beginning of his post is independently worth considering:
It’s initially tempting to respond to that by listing the intelligent points that I’ve heard made by libertarians, and then explain how a sound progressive politics conducts by incorporating those critiques and moving forward to a higher synthesis.
This is also how a sound libertarianism is constructed. We're seeing this happen: the libertarianisms of Will Wilkinson, Tyler Cowen, Richard Epstein, and Brian Holtz (and myself) are all heavily influenced, in different ways, by the left-liberal and left-"progressive" critiques of old libertarianism. This is a major source of conflict in the movement--the old folks don't really know what to make of it. To them modern libertarianism is "watered down"--the young folks really believe exactly as they do but "compromise and conceal" it. To modern libertarians, however, the libertarianism of Dave Nolan or Jacob Hornberger is a degenerate folk-libertarianism full of ignored subtleties and cognitive dissonances. (Don't ask me in what camp to place the aretaic theories of Rasmussen and Den Uyl; I don't know.)