I view what Google (and many other corporations do) as tax arbitrage.
We see this here in the US where States will undercut each other to get a business to move to their state (although it is different from doing this at a country level). In my opinion it is a fools game for States to do this - it is a race to the bottom and the company will just pack up and move to another state as soon as they're done taking advantage of the tax code.
I also think it is fine for an individual politician to express indignation as (a) they may not have been in office when this was passed and (b) one politician can't, by him or herself, change the law.
What I find most interesting was what happened in the UK with Starbucks - basically they bowed to public and government pressure on tax avoidance. Still, Starbucks sounded like they were "doing the right thing" as though paying tax was voluntary. Hysterical.
"Tax competition is a good thing"? How does that make any sense? If competition is a good thing for a particular service (say, firefighting), then you don't need to fund it with taxes, and indeed shouldn't; you can fund it by charging the consumers of the service. It's only the services for which competition-on-price is actually a bad thing (e.g. health care, stock market regulation, and indeed firefighting) where you can morally justify funding them with taxation.
Tax competition is a good thing. Kudos to Google and Bermuda.