Vikarion: call me a jaded cynic, but I'm not really interested in the "whose faction is better than who else's" debate. There's another thread here dedicated exclusively to how much the Minmatar have been "the faction of fail" lately, which would mean that three of the four are now horrible by our contemporary standards for one reason or another.
Disingenuous as this might sound, I'm not actually trying to argue for making the Caldari the "best faction". My problem isn't that, say, the Federation has western values which attract some players to them. My problem is consistency.
I've always been told that, in creating a good story, you should "show" rather than "tell". I'm not particularly great at this, perhaps, but then, no one is paying me to write, either. But what CCP tells us, and what CCP shows us, are two different things.
It is almost certainly true that life for a disadvantaged person is far better in the Federation than in the State. In fact, although the State is said to have a reasonable standard of living, its citizens have far less privacy, fewer rights, and more obligations than anyone living in the Federation. There's not a lot of personal freedom. For many people, that's a bad side to the State. And we are both shown this, and told this.
On the other hand, the State is supposed to be, militarily, the most powerful empire (at least according to EvE:Source). It's supposed to be on the cutting edge of military tech, and to have the most advanced weapons and ships, as well as the best-trained naval personnel. But while we are told
this, what we have been shown
for the past several years is the State being completely incompetent in all areas of military action and strategic thinking. I can list examples, but it's really not hard to go find them, and this post is long enough.
Similar results obtain for the other empires. Their bad sides are given full display. Their good sides...well, we're told about them, but for the most part, the Federation gets portrayed as being even better than what other empires are supposed to have as their "hat".
Which ends up with, yes, the State, Empire, and Republic basically being used as stick figures for the Federation to be better than. I don't see how this is fun. I don't even see how this is fun for Fed RPers. This sort of situation is usually the result of a writer deciding on a rather masturbatory endeavor to produce his or her ideal character (mary sue), but in this case, I'm not sure that it's intentional. I just argue that the current situation is not ideal.
It also detracts from verisimilitude. In real life, countries really do have to have priorities. For example, the U.S. spends a lot more on its military and a lot less on social programs than Denmark (percentage-wise), IIRC. Denmark, on the average, has much happier citizens than the U.S. - but, on the other hand, the U.S. could crush Denmark like a bug if Denmark tried to invade the U.S. Wouldn't it be strange to have a story where Denmark not only had the happy citizens, but also invaded and annexed the east coast of the U.S.? All other things being equal, that story would be unbelievable.
Hopefully that made a little more sense.