One often hears that Hong Kong employers find it difficult
to hire fresh graduates with good competence in the English language.
If my analysis is correct Hong Kong government and industry are
already obtaining many more than they deserve.
The Hong Kong economy is suffering a major net social loss
brought about by well-intentioned, but poorly conducted government
The analysis is based on a joint supply curve which divides
the supply of high-level English language competence into two
parts: low-level competence supplied by the regional government
as a quasi-free, quasi-public, economic good and a private sector
premium for high-level competence.
In the absence of a market for low-level competence, the market
for high-level competence is clearly distorted. In order to understand
the policy ramifications associated with this distortion, net
benefits to each of the key players are fully illustrated and
examined. The key players include government and industry employers,
private sector suppliers of high-level competence, the Hong Kong
Department of Education, and last but not least Hong Kong taxpayers.
Although this model is only a theoretical abstraction, it
is based on many years of carefully observed social phenomena,
and provides an excellent theoretical basis for future empirical
Finally, unlike many mathematically sophisticated models that
require substantial review before they are understood, this model
is achieved entirely with pictures and easily understood by anyone
with a basic, but solid understanding of market supply and demand.