He mentions increasing salary won't lead to increased productivity ... and that's true, if the same developer remains. But what if we remove that constraint? What if increased salary means a higher quality of developer takes the position? Wouldn't this mean higher productivity?
Bit of a cold scenario, but one way to game it out is hypothetically removing the current dev and then hiring someone better at double the pay.
Or, less unfair seeming, double the pay by hiring a second dev. That might not double productivity ... depending on the situation it might 1.5x it, or just as easily 4x it.