It's disingenuous to claim that a smaller military is inherently more capable than a large military. Although we have to accept that there is a dividend to be taken from more accurate weapons, the beancounters have a distinct inability to understand the implications of fewer platforms for those weapons.
I think the single best example is the cut to the surface fleet of the RN. Hands up who thinks 25 destroyers and frigates can do as much as 36? Anyone? No, I thought not. You can fit all the superb weapons you want, but if you don't have enough platforms to conduct all of the missions you need to conduct, you may as well have kept what you had before. Common sense says that if one aircraft can now take out 3 HASs, those 6 in 1990 could take out 18. So why cut back?