Google has every economic incentive to prevent paid SEO strategies from working. Google sells placement on the results page--that is their whole business. Gray- and Black-hat SEO is the only serious competitor; money Google takes away from those operators will go straight into Adwords.
At a surface, conscious level, you're right. Google wants any tolls paid to appear in their results to be paid to them.
But considering the whole competitive ecosystem, and indirect effects over time, nasty SEO can help make Google money. Consider these mechanisms:
• when the natural results get polluted, the vetted AdWords placements become relatively more attractive to clickers and advertisers.
• Google' self-image requires they reserve some ostensibly 'non-paid' slots on the front-page. If in practice these all still have a high cash cost, even though paid to third parties, then everyone needs to open their wallets, rather than just do pure-of-heart helpful info-design, to appear on the front-page. That is, amounts paid to third parties serve as a short of shadow bid, placing a rising floor on the value of AdWords placements.
• SEO tactics that mildly or temporarily fool Google, but that Google then overcomes, provide a dynamic, ever-growing barrier-to-entry to other later-entrant search engines. Competitors don't have to do as well on the same web Google first mastered; they have to do as well on the web mutated by Google's economic incentives and iterated cat-and-mouse game.
