You're both right. Long-term benefit certainly should be the guiding policy, but as Keynes observed 'in the long run we are all dead.' Because many people are selfish and because political systems are relatively easy to game, short-term self-serving strategies often prevail.

It's the same thing in dictatorships. Many dictators could use their highly concentrated authority to undertake large projects that would benefit their population significantly and leave a great legacy. But most of them don't because it's easier and more predictable to just maintain an iron grip on power and enjoy a life of luxury while suppressing any opposition.

Strategically, many people prefer to be a big fish in a small pond than the reverse.