The furore surrounding Australia's foreign aid budget misses the point. Rather than a facile comparison of dollar figures, what we really need to talk about is the purpose of our aid program. I don't mean our aid effectiveness but our aid philosophy.
The thinking behind the program is that poverty is a technical problem to be solved by social engineers and technical experts. This view holds that for poor people to become healthy and rich, they need a certain number of vaccines, a certain variety of fertiliser for their crops or a certain type of infrastructure. Proponents of this argument are dismayed by the budget because they believe foreign aid can make a poor country rich if we just gave a bit more.
However, rich countries have given poor countries $US2.3 trillion in aid since World War II, and the vast majority of them remain poor. Indeed, economists William Easterly and Ross Levine believe that, on average, African countries were as poor in 1995 as in 1960 despite receiving hundreds of billions of dollars in foreign aid.
Government-funded foreign aid has failed for a range of practical reasons. Aid agencies suffer from the same practical shortcomings as government departments: they lack accountability, information and the incentive to do the job they were created to do.
But the real reason government-funded foreign aid has failed is philosophical. Foreign aid's technical experts and social engineers operate and implement their programs with and through the mostly authoritarian governments of developing countries. But it is these governments that have created poverty in the first place. To leave poverty behind, poor people need individual rights and legal, economic and political institutions that protect them from these governments and allow them to fulfil their destinies unimpeded: individual rights such as freedom of speech, freedom of association, freedom of religion and economic freedom; and institutions such as the rule of law, free markets, private property rights, and democratic and decentralised government.
China's evolution towards a more open economy is a prime example of how institutional reform and even a limited improvement in individual rights have lifted hundreds of millions out of poverty.
Botswana made a commitment to free markets, private property rights and the rule of law in the 1960s. It went from being the third poorest nation in the world to a middle-income country by the 90s and is one of Africa's few success stories.
And the West managed to develop from being as desperately poor as anywhere in the world to its present level of prosperity through the development of individual rights and institutions.
The success of rights and institutions is down to the fact global poverty is complicated and diverse. It can't be solved with one-size-fits-all solutions from foreign experts sitting in head office.
The people who know most about poverty are the poor themselves. Individual rights and institutions give local people with local knowledge the opportunity to solve local problems.
It is the sum total of these efforts that will eventually cause the tide to turn on poverty.
Government-funded foreign aid's challenge, therefore, is to find ways to strengthen these rights and institutions, not roll out large national programs that consolidate and legitimise authoritarian governments.
Easterly describes these two approaches as authoritarian development v free development.
The establishment of individual rights and the development of institutions is undoubtedly difficult to achieve — much more difficult than, say, pouring money into the broken government education bureaucracies of developing countries. But it is not as difficult as many think and there is significant low-hanging fruit to be grasped.
In Cambodia, it takes 85 days and an average year's salary to register a business, making it difficult for grassroots entrepreneurs to participate in free markets. Here, getting an Australian Business Number is free and takes minutes.
In Uganda, all it took for a dramatic reduction in corruption in the education department was a media storm surrounding the release of a study by researchers Ritva Reinikka and Jakob Svensson that identified that corruption was, in fact, occurring.
And comparatively cheap private property titling programs in Peru have been shown by researcher Erica Field to increase women's empowerment, investment in agricultural and urban infrastructure and labour market participation.
None of these measures is expensive or particularly difficult, they all address individual rights and institutional reform, and they would all have genuine long-term, sustainable benefits compared to foreign aid in its present form.
That's not to say there is no room for practical interventions in our aid budget in areas such as health and education.
Indeed, these programs have been shown to work better in a stronger institutional environment. But these need to take place with the endgame of individual rights and strong institutions in mind.
This is the point foreign aid has been missing for almost a century.
It would be a great day for the world's poor if the aid debate in this country ever went beyond childishly comparing dollar figures. A debate that re-imagines foreign aid's task as strengthening individual rights and legal, political and economic institutions in developing countries would be a genuine step towards ending global poverty permanently.
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