Unlike President Bush, who has contempt for book larnin', Schwarzenegger talked for years about how much Milton Friedman meant to him. Then when he got into power he did the same thing Bush did as President -- he became a big spender. It's almost as if he used free market ideas to gain power, then once in power he abandoned them. As Governor he has acted according to the opposite premise, the premise of state intervention in the economy.
My first conclusion was that unlike Reagan, Schwarzenegger really is as dumb as he looks. But he is a highly capable man who has succeeded now in three different careers, body building, acting and politics, and he is surrounded by the best advisers taxpayers' money can buy, so something other than stupidity must driving the Governor's statism.
The only explanation I can see is pragmatism. A politician in power comes under tremendous pressure from a thousand directions at once. Every pressure group wants its piece of the taxpayers pie. The Democrats pull in 10 different directions while the Republicans pull in 10 other directions. The media have their agenda. The one thing every faction has in common is that it wants the state to intervene in the economy for its sake.
It takes a strong commitment to principle to keep from giving a little to this faction and a little to that faction, and what the hell, let's buy some good press by increasing the budget for x and the powerful Chairman of the Way and Means Committee promised he would support y if I would just throw some money at z...
Arnold Schwarzenegger might have been impressed by the individual arguments for freedom in Milton Friedman's writing, but he obviously never grasped the principles behind the arguments. In applying those principles in action, he has been a complete failure. He has gotten lost in the forest of pressure groups and voices crying "Spend, spend spend!" Without an understanding of principles such as individual rights, he has no map out of the forest.
It takes a man of uncommon integrity and understanding of the principles of liberty to govern well in today's welfare state. To shrink the budget and dismantle the regulatory state would take a giant. Schwarzenegger and Bush are no giants.