It doesn't, the league is in no way more competitive, at all.
The arguement is based on a complete fallacy, last years position, score, everything is basically irrellevant as, there were 3 different teams and hundreds of different players.
Chelsea have underperformed, Spurs have underperformed, Liverpool have underperformed, rinse repeat for half the teams in the league.
The only relevant question would be, how many more points might we have had with Cesc and Nasri playing instead of Gervinho and Ramsey, for anyone that isn't utterly and ridiculously blind, the answer is both more, and still not enough to be competitive.
Utd, with an arguably worse team, or similar team have improved FAR further than Arsenal have in the league, with much less competition at the top of the league? So how does that compare to Arsenal? We're further away than we were, we've gained FAR fewer points than the top two have this season, we were absolutely uninvolved in the title race at every stage this season.
At points last season we were 5-7 points behind Utd with 20-30 points to play for still in the season, at the same point this year we were between 17-20 points off Utd this season.
Utd have at the same point in time(but played one game more) won 5 more games, have 9 more points, City have played 2 more games at the same time(this is simply how footie 365 does its comparison) and they are 21 points higher than they were last season, they have won 8 more games in that time, still 6 more when you take into the games in hand potentially, that is a massive improvement.
Arsenal have at the same time played 2 games more than last season at this stage of the season, we've got 2 whole points more for 2 extra games. We have a WORSE points per game ratio at this point last season (66 points/36 games vs 64 points/34 games),
we've won two more games having played two more games at the same point, we've conceded 8 more goals(this has come down in recent weeks), we've scored one more despite playing two extra games and having the most prolific striker this season.
WE lost 6 games last season at this point, we've lost 10 this season, I'll let you do the math, that's losing over 50% more games.
Arsenal have not improved in general.
For me Utd, City and Newcastle pretty much prove where the top end of the table has gone, more points available, much weaker, easier to get wins, all doing significantly better than last season. The other "big" teams have all done much worse. We were 13 points behind Spurs at the end of Jan, and 2 behind Liverpool.... it's less our good run and more both of those guys horrifically woeful run that has seen us leapfrog them. Were we 13 points behind Spurs and a couple behind liverpool at the half way mark last season?
EDIT:- For the sake of it Newcastle, 21 points more, 8 more wins, identical to City's improvement this year, Utd have improved but less so than those two and a large part of that is, they simply had less room to move.
We've managed to stay static, in a MUCH easier season while other teams have imploded for various reasons. We've actually gotten worse as frankly we had as much room to improve as Newcastle or City did, and we've basically stood still.