Right but if that was another player, and you declared war on them, they would shift to shipbuilding. And as they have a better economy, they'd only have to play hide and seek with your fleets for a little while until they built enough ships to meet them in battle. You can't build or rebuild as fast as they can, so it would only be a matter of time before they overwhelmed you. It might take awhile for them to do so, or it might happen pretty fast if they have a lot of shipyards. Because it's the AI, and the AI is not smart, their economic strength is irrelevant. Most likely you could take them even if they were stronger than you to start with. And you can take their shipyards to prevent them building more ships. But in the most simplistic of figures, a higher economy translates to more power. That the AI can't effectively manage that power isn't relevant. Having two separate systems of federations for AI's and players would be messy.
I'm not much of a federation type. Most of the time I join a federation it's only for a brief time until one of the members annoys me and I have to kill the federation. I do agree that I preferred the previous method, though I have to say I hated it as well. If you're in a federation, you would have a certain say in the deployment of federation assets whether you were in direct control or not. That's the whole point of a federation. Otherwise it's an empire.