They may not be completely stupid, but usually have a distinctly different agenda than the general populace.
Most governments of this ilk are more than happy to throw away vast sums of money (that was never theirs in the first place), if it furthers their own aims.
Having armed peasants running about domestically makes them nervous. Of course, they're more than happy to arm said peasants and send them abroad to put them in harm's way.
If this observation is regarded as too political, please feel free to erase it.