From 1974 to 1985, Israel was gripped by constant economic crisis. Those years, economically the worst in Israeli history, were dubbed "the lost decade." Every possible mistake was made, from the manipulation of bank shares that sent the banks into collapse, forcing the state to nationalize them, to Israel sinking into debt that it couldn't meet as government budgets mushroomed to gargantuan proportions. And then, of course, the hyperinflation. Only on the brink of economic catastrophe did Israel come to its senses. The great stabilization plan of 1985 was drawn up, setting the stage for a new economic reality.

In the 25 years that have passed Israel has proved that it learned from those dreadful times. Budget management became more proficient as the leadership acknowledged the existence of economic rules. Financial supervision also became more effective, in particular over the banks. And the management of the banks themselves also improved.

Learning the lessons at every level enabled Israel to weather the most recent global economic crisis. By the standards of the developed world, Israel did astonishingly well during these two terrible years, thanks to responsible budget management and responsible behavior by the banks themselves. Without question, the crisis of the Lost Decade helped Israel to rise above and stride forward while much of the world reeled.

But victories can be Pyrrhic ones. The very sense of triumph can bear the seeds of future disaster. Israel comes out of its crises strengthened, it would seem, and comes out of triumph dim-witted and stinking drunk on its own success.

There can be no other explanation for this week's farce. The state budget for 2011 and 2012, setting tax, social and macroeconomic policy, was approved barely over a month ago. A majority of Knesset members voted in its favor.

Nothing has changed since the budget was passed (barring the events in Egypt, which do signal the rise of a major new threat ). Yet MKs, cabinet members, union leaders and industrialists seem to be vying with other over who can change the budget the most. The worst thing is that the prime minister, susceptible to pressure and devoid of governing ability as he is, capitulates.

Leave Egypt aside: Every Israeli with a brain realizes the new situation there demands heightened caution on our part, as well as greater budget reserves to cope with the potential new danger on our southern border. Leave the rise in excise taxes on gasoline aside: It was superfluous but not very significant, adding just a few percent to the price at the pump. Leave the prime minister's dignity aside. None of that matters. What does matter is that a nation that won worldwide applause for its budgetary discipline and credibility is destroying its credibility with its own hands.

One could almost regret that Israel weathered the crisis as well as it did to become an economic light unto the nations, because we drew all the wrong conclusions from the success. Perhaps an even worse crisis would force some sense into the heads of our leaders, making them think twice before taking decisions that are short in term but long in imprudence, at the expense of their own credibility and Israel's long-term security and prosperity.