conservative fatalism * inclusive neoliberalism = ?????

The econoblogosphere is abuzz with a resurgence of "what we need is not short-term stimulus but instead long-term reform," predictably pissing of the Keynesian and being warmly praised by their opponents. Peter Frase reads two specimens of the species and observes:

Philosophically, the Brooks and Rajan essays are interesting for the way they awkwardly combine an old-fashioned style of conservatism (the poor will always be with us, accept your lot) with a more modern form of inclusive neoliberalism (accept deregulation, and you too can be rich!) By itself, the first style of argument is simply intolerable to modern sensibilities, but the crisis has rendered the second increasingly implausible. Together, however, the two arguments add up to nonsense.

Sure, it's nonsense, but I don't think it's particularly distinctive nonsense. That is to say, neoliberalism has always combined both elements: criticism of the "rigidity" of labor market controls and welfare state protections that are pushing against the necessary tide of market competition, and the promise of increased prosperity in the long-term from the efficiency promoted by the market. If there's a relatively recent twist, it's a slight muting of the promise by reference to secular changes in the economy (Rajan cites Tyler Cowen's Great Stagnation), which only serves to highlight the ostensible hard realism of the claim that we need to accept the costs of adjustment.

The question is, adjustment to what? Sure, the Germans and Northern European "flexsecurity" welfare states crammed down their wage costs in the 2000s and began to eat everyone else's lunch in the export market. Will this really look like such a promising model when everyone else lowers their wages to match? As Frase says, it's somewhat galling that these people have appropriated for themselves the label 'structural,' as in "structural unemployment" or "structural reform."