If a government borrows money from some of its citizens then other citizens must be taxed to pay for it, even if it borrows from abroad. And what the government spends cannot be invested elsewhere. There really is no such thing as a free lunch. But as a fully paid up member of the Tooth Fairy Club, usually called Keynesian economics, Davidson believes some economic policies can actually give you something for nothing. So much for opportunity cost.
Higher wages force employers to invest in equipment and training, and to improve productivity.
This is utterly ludicrous and is clearly another form of the 'Ricardo effect'. You cannot invest more than is saved. If wages are forced up above market clearing levels unemployment simply rises. Any new investment these rates might induce in a company can only occur at the expense of investment elsewhere. On the one hand, left-wingers like Davidson would have us believe that greedy capitalists will exploit labour to the maximum, while arguing in the next breath that capitalists are so slack and inefficient in their use of labour that they need the stick of higher wage rates to use it more productively.