Neither. The point of the cost cap is literally to stop teams spending $500 m on it every year and forcing other teams out of the sport. Everything after that is a bonus. (At one point, the FIA's position was that some redundancies might be a good thing for F1, so I don't think "race to the bottom" was ever considered a non-bonus).
If F1 teams find that a particular country/region can spend far less on personnel, why would the teams continue to operate in an expensive location if it means that the absolute dollar cap gives them a competitive disadvantage?
Currently there is no race to the bottom, but if Audi feels like running a Swiss team guarantees failure, how long will they keep running Switzerland?
The cap was created so teams don't spend their opponents into oblivion, but the question remains: is the point of the cap to ensure the teams spend as little as possible, or that everyone has fair access to resources?