It appears that cutting corporate taxes does not make a country more attractive to investors. I do not find this surprising. The long term benefits of the right government expenditure (on education, infrastructure and health, for example) are obvious. So why are governments so keen on tax cuts?

I think the answer lies primarily the term over which governments think. Investing in eduction will take a generation to deliver its full benefits. Very little can be delivered in time for the next election. The benefits of corporate tax cuts are immediate. The stock market goes up, people get more money in their pockets, and wavering investors are persuaded, by higher returns, to make investments.

Another problem lies in the tendency of governments to look to businesses for advice on what is good for the economy. In practice, this means the management of big companies. These are people whose badly thought out incentive schemes encourage them to think in terms of the short term share price, rather than the long term growth of their industry.

In short, no one really cares about the long term.