>>The machines don't have to be diverted from some other use, they can be created when they wouldn't otherwise have existed. Of course, that's capital formatio

>>The machines don't have to be diverted from some other use, they can be created when they wouldn't otherwise have existed. Of course, that's capital formation. You're not going to get more capital formation as a result of artificially raising manufacturing costs. >>You're assuming that money directly represents current-day resource allocation with a lack of flexibility. I don't understand what you mean and how it relates to my point. >>But that's exactly what you're arguing. You're currently making revenue equivalent to $15/hour on labor cost of $9/hour. You could make the $15/hour on automation cost of $10/hour instead if the labor cost rises to $11, and you will, because you still want the $15 which is enough more than $10 to be worth your investment. If my profit margin goes down, it's possible I close shop and invest the financial capital in real estate. Making manufacturing cost more does not cause more to be spent on manufacturing. Let's imagine for a moment that all capital was automation capital, and that the only kind of investment was investment into new automation machinery. Will you acknowledge that in this scenario, a rise in minimum wage would lead to less output, and less investment into new automation?