Why governments prefer domestic bliss

A new report PricewaterhouseCoopers says Britain could have had one of the world's biggest sovereign wealth funds had the windfall from its North Sea oil been saved rather than used to cut taxes and boost spending. The news will cause wry smiles among Gulf funds, particularly in light of EU moves to demand greater transparency from sovereign wealth funds.
The report points to Norway, which has used its North Sea revenues to build up a frighteningly profitable sovereign wealth fund worth some $650 billion, and says had the UK saved just half said its windfall it would have a fund bigger than that of Kuwait ($430bn).
Right now, with oil prices flying and sovereign wealth funds making eye-catching deals, the decision to use the monies to reduce taxes looks short sighted. But in a democracy with 50 million tax payers asking for some immediate benefit from the oil jackpot, who can blame successive UK governments for pandering to voters? Free marketers will also say it encourages individuals to invest their tax-break as they see fit.
In 20 years time it may be that Gulf governments will question why they spent so much oil money subsidizing housing, education, healthcare, water, loans, electricity and food for nationals, when they could have been building a bigger investment fund. But they wouldn’t be the first to want a quiet life at home.