Another great Grand Final, with some excellent play and some misses that will be rued for a long time to come. I’ve never followed either team, but men watching a sporting match have to take sides, and I went for the Swans, while my son backed the Eagles.

The browning of Australia

Reader Proust points me to this helpful BOM site showing rainfall trends in Australia. You can choose your own region, season and time period.

Here’s the most relevant to consideration of the effects of global warming, the trend since 1970, which demonstrates how much drier the climate has become over the period in which warming has been observed. As various people have pointed out, is was even drier during the famous Federation drought at the beginning of C20, so the role of global warming isn’t conclusively established, but it would certainly seem unwise to bet on a rapid return to the average observed in the historical record

Rainfall trend


The Coroner’s report into the death of an Aboriginal man, Mulrunji, in the Palm Island lockup in 2004 has found that his death was the result of a bashing by the police officer in charge of the station. Since the case may result in a criminal prosecution, I don’t intend to discuss issues of guilt or innocence in relation to Mulrunji’s death.

What is clear as a result of the case is that the system failed in all sorts of respects. The initial police investigation was a farce, with the investigators having dinner with the office under investigation, and other aspects were no better. Even in the absence of criminal charges, there’s more than enough in the coroner’s report to suggest that the officer should be stood down until the matter is fully resolved.

More importantly, the government seems to have done very little to implement the recommendations of the 1991 inquiry into deaths in custody and, by inaction, has let things go backwards putting at risk the modest gains of the 1990s. The dismissive attitude of Police Minister Judy Spence along with the government’s post-election decision (not mentioned in the campaign) to scrap the Indigenous Policy portfolio, suggests that things are only going to get worse.

There aren’t any easy answers to the problems of drunkenness and crime in Aboriginal communities. But that’s not a reason for ignoring those problems, and letting things slide back to the worst days of the past.


I’m at the Australian Conference of Economists in Perth, where I’m presenting a paper on water policy. I went to a paper today on ‘home bias’ and the International Capital Asset Pricing Model. The general home bias story is that most people hold most of their assets in their own country, when standard theory suggests the optimal portfolio should be much the same for everyone, regardless of location.

Following this up, this suggests that everyone should hold assets in a given country in proportion to its vaue share in the total world market (about 2 per cent for Australia).

It struck me that there’s a paradox here. Suppose I’m considering investing in two overseas stock markets with similar characteristics (mean return, variance, covariance with the Australian market). It seems obvious that I should invest the same amount in each market. But, if you accept ICAPM this is wrong, unless the two markets have the same capitalisation. ICAPM implies that I should invest more in whichever market is larger.

The paradox can be resolved if larger markets are more stable, but casual observation doesn’t support this. Has anyone seen this issue addressed?

What I’ve been reading

I finally got around to The Weather Makers by Tim Flannery, which I’ve had on my shelf for ages. I was happy to see I got a brief mention, pointing out the misleading way that model simulation results from MEGABARE on the cost of Kyoto were presented in public debate.

Overall, the book is impressive but depressing. It seems clear that lots of species are doomed to extinction even if we move rapidly to stabilise CO2 concentrations, something which the denialist lobby is doing its best to prevent.

An interesting (and alarming) sidelight was the observation that the destruction of the ozone layer would have gone much faster, potentially leading to catastrophic damage, if we’d used chemicals based on bromine rather than chlorine-based CFCs. It was only a matter of chance that the economics turned out better for chlorine. It’s worth recalling at this point that many of our leading climate change denialists (such as Pat Michaels, Sallie Baliunas, Fred Singer, John Brignell and Steve Milloy) were also ozone hole denialists and some still are.