This neocon fantasy that the best way to be secure is to exercise facism-level military dominance over the galaxy is self serving nonsense that does more harm than good in the long term. Section 31 may claim to be protecting Starfleet and may even gain them some short term benefits, but from what we've seen of their plans if just one part of them goes wrong and anything gets found out it could be a full scale war, and if any part of it gets discovered the Federation loses its moral credibility.
It is true that Starfleet sacrificed military-readiness because of a false sense of security. But being prepared for conflict doesn't mean sacrificing on principle, it just means not being a fool. Of course they should have had a stronger military, they only built the Defiants because Q gave them a little hint that they were in deep trouble.
Starfleet is founded on a principle of non-aggression, and they're correct to choose a peaceful resolution whenever one is available, and also correct not to interfere in the politics of foreign governments. Just so long as they are strong enough to defend themselves when necessary, and the Borg threat certainly led them to take defense of the realm very seriously.