SHAW SIN-MING, who frequently writes opinion pieces for this newspaper, is an old friend with whom I often discuss things. We do it by e-mail these days as he is now in Oxford as a visiting fellow at St Antony's College.
And I think I know at least one person he had in mind in his most recent contribution on Monday (The way this world works - like it or not) when he referred to 'pro-peg diehards' who argue that real estate prices are 'irrelevant' to the peg. It is an argument I made to him only last week although I did not couch it quite so strongly as to say they were irrelevant.
His case is that wages and prices in the mainland are much lower than in Hong Kong but people in the mainland can do most things we do just as well as we do them.
Thus we stand to lose competitiveness and hollow out our economy unless we bring our wages and prices in line with the mainland's. Our only way of doing this if we retain our 'overvalued' peg to the US dollar at its fixed nominal rate of 7.8 is through continued deflation and we have a good deal more of it to come before we are in line.
The weakness I see in this argument is its assumption that people in the mainland can do most things we do just as well as we do them. Perhaps they can but they are doing them nowhere near as well at the moment and there is a simple way of demonstrating this fact.
Our gross domestic product per capita at the moment is just over US$24,000 a year. The equivalent for the mainland is just under US$1,000. Worker for worker, the mainland is simply not even in our league for productivity.
Look at it another way. The top line in the chart shows our GDP per capita as a multiple of the mainland's since 1981. From 1983 to 1994 the gap actually widened and only since 1994 has the mainland started to gain ground against us, although it is still an enormous way from reaching our level.