'The national budget is the soul of a country." So said the great Austrian economist Joseph Schumpeter. There is much truth in this observation. Looking at how much tax is raised, where public spending goes and how well taxpayers' money is managed tells a great deal about a country's politics, society and economy.
In the post-troika era, the Government has regained a considerable degree of control over the national budget and politicians are hearing constantly from every part of society as to how this regained freedom should be used.
Will budgetary sovereignty be exercised more wisely in the decades to come than it has been over the past four decades?
To answer that question, the past, the present and the context for the future all need to be considered.
A good starting point in considering the past is the 1970s. Then, something very significant, long-lasting and still unexplained happened in Ireland and most of the rest of the rich world.
Before that decade, governments in democracies usually avoided running up large debts in peacetime and borrowed mostly only to invest. Then, in response to the oil crises and recessions of the 1970s, governments in many developed countries began borrowing for day-to-day spending.
In the more stable 1980s, too few returned to past prudent ways and each year's overspend was added to the existing debt pile.
The accompanying chart shows public debt in Ireland going all the way back to 1929. The sharp and sustained uptick from the early 1970s illustrates the extent of the loss of fiscal control in those decades. But this was not only unusual by historical standards, it was among the worst performances in the developed world.
Ireland, along with Belgium and Italy, ran up the biggest debts in that period. By the 1980s, these three governments all owed their creditors a full year's GDP or more.
Ireland escaped its flirtation with bankruptcy when the necessary measures were very belatedly taken in the late 1980s – the cost of that delay was a decade of high unemployment and emigration.
The Celtic Tiger in the mid-1990s, which came about partly because of fiscal stabilisation, allowed Ireland to become a low public debt economy by the turn of the century. The luck of the Irish in enjoying the most spectacular period of economic growth ever experienced by an already developed economy contrasted with the two other fiscally inept European states – Belgium and Italy. They continue to endure austerity to varying degrees to this day.
One might have thought that the experience of such a protracted fiscal crisis would have made the political and administrative classes allergic to taking chances with the public finances, and that voters would punish profligacy ruthlessly.
One might also have thought that the new constraints that came with joining the euro in 1999 would have been an additional reason for caution – without exchange rate flexibility and interest rates to influence the domestic economy, small open economies in currency unions only have fiscal policy to cushion unpleasant shocks (Finland, which also joined the euro in 1999, learnt those lessons well and is in a much better position today).
But as the good times rolled, neither the recent past nor the new constraints much bothered politicians, or the public. In the two years before the 2002 election, a massive politically motivated spending splurge took place. No one shouted stop. That coincided with a slowdown in tax revenues as the dotcom recession hit Europe and North America. The public finances inevitably went south.
The European Commission censured the Government at the time, only to have its critique dismissed out of hand. Klaus Regling, who now runs the eurozone's permanent bailout fund, was the senior relevant official in Brussels at the time and has subsequently said he regretted not fighting his corner.
The spending brakes were slammed on after the 2002 election and Ireland was lucky in that the international recession of that period was unusually mild.
Also important in preventing a loss of fiscal control at that time was the inflating of the property bubble, which caused the Exchequer's coffers to swell, albeit artificially. But when the bubble burst in 2007, tax revenue growth halted and then quickly began collapsing. By the middle of 2008, a massive and widening gap had opened up between revenues and expenditure. Double-digit deficits combined with the €65bn that was ploughed into the banks caused public debt to explode to over €200bn by 2013, or 125pc of GDP.
Looking to the future, can we hope that the fiscal recklessness of the past four decades will be abandoned once and for all?
There are reasons to be hopeful. Between entering and exiting the bailout, the context changed radically. At home, the Irish Fiscal Advisory Council was set up to provide independent scrutiny of how the public finances are managed. At EU level, a whole battery of new rules and warning systems have been put in place to avoid public finances crises.
Member states are now scrutinising each other more closely and the European Commission is playing a far more active referring role. With such mechanisms in place, the sort of election-buying that took place in the run-up to the 2002 election, and the dependency on unsustainable revenues, as happened up to 2007, will be less likely in the future.
Ireland also faces additional, less permanent restraints. Until 75pc of bailout loans are paid off, the troika will conduct post-bailout check-ups twice a year.
A second constraint comes in the form of the fiscal treaty, which voters backed in a referendum in 2012. Until such time as public debt falls to 60pc of GDP (it is now more than twice that level), its reduction will be a binding obligation on governments.
There is also some reason to hope that the political and bureaucratic classes have internalised the need for better fiscal management. Unlike the 1980s, the ignominy of being bailed out will surely lead to greater caution and restraint in the future when (and if) there is budgetary leeway, while a greater focus has been placed on having the appropriate human resources across government and configuring them to improve the management of the public finances.
Yet there are also reasons to fear that the crash and the bailout have not changed the entrenched instinct for fiscal irresponsibility.
Already, politicians have been raising expectations of tax cuts despite Ireland recording one of the largest deficits in the EU last year and despite the risk of insolvency remaining high. Nor is it clear that enough has changed institutionally. Last Friday, at a conference on Ireland's post-troika prospects, the head of the ESRI, Frances Ruane, questioned whether the analytical capacities had been put in place to assess, among other things, how the advent of "big data" can be exploited and noted that government departments remained excessively silo-ised, while Independent TD Stephen Donnelly lamented the weakness of the Oireachtas in its capacity to challenge and probe the Government on budgetary affairs, despite the recent improvements.
The Irish economy crashed in the 1950s, 1980s and 2000s. Let us hope that things have changed sufficiently to avoid yet another one in the decades to come.