25 years state and federal government economic policies have been driven by an unquestioning acceptance of the value of deregulating the Australian economy. There is no doubt that deregulation has made the economy (especially the financial sector) bigger. Size is not everything. There have been some very large losers in the deregulation process, and some changes have had adverse social and economic effects on many Australians.
Two steps to deregulation are excellent case studies for empirical evaluation of the question. They are the float of the dollar in December 1983, and the deregulation of the banking system that began in 1985. This article is about exchange rates and the consequences of the float of the dollar. Exchange rates are simply the price of one currency expressed in terms of another. For example, at the present time you can exchange one dollar for US74.68¢ at most banks. If you travel overseas, your credit card will have the overseas currency amount spent but it will be converted to an Australian-dollar amount you have to pay.
Yet, this function and its benefits are immaterial to an evaluation of the benefits of floating the dollar. The view that floating the dollar will enable automatic corrections to the Australian economy to reflect its relative strength or weakness at a point in time is also immaterial.
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