The reason it has been shown up is because of bad management IMO. I have looked back at the England team that went the semi-finals in Italia 90 & Euro 96 & the best England XI currently except for a few positions has more talented players than those sides i think. They have played better because they had good managers in Sir Bobby Robson & Terry Vernables who made the team play as a unit.
England currently:
James/Carson/Green
Richards
Cole
Terry
Ferdinand
Beckham
Cole
Hargreaves
Gerrard
Rooney
Owen
England XI Italy 90:
Shilton
G Steven
Pearce
Adams
Walker
T Steven
Platt
Robson
Gascoigne
Waddle
Lineker
Not sure if these where the exact starting line-ups for any games with the 96 & 90 sides but i'm selecting them based on video's my popps has that i've seen. Currently England have better bench strenght in defense & mid-field
Both the 90 & 96 sides had a better keepers no debates, defensively i think i would take Terry/Ferdinand or the Campbell/Ferdinand combination of recent times over those of 90 or 96, full-backs about even also. The mid-field well based on video i'd say Gascoigne, Platt & Ince were superb central mid-fielders probably better than the recent lot of Gerrard, Lampard, Scholes but i'll leave that debate for the older folks while wingers like Waddle & my boy McManaman compared to Becks & Joe Cole well not sure here.
Going foward though nothing beats Rooney & Owen. In 96 Shearer/Sheringham were brilliant no doubt but they are not as skillfull as our current generation striker partnership, while in 1990 it seems it was a similar case to Owen after Euro 2000 & prior to Euro 2004 where England had only 1 quality striker.
I'll mostly leave this particular reply to 1990 vs the current lot, as others have addressed 1996. Only pausing to say that 1996 amounted to seeing off the Scots, one excellent performance against the Dutch, the luck of the gods against the Spanish, and failing to beat a German side whose quality depends on which of Matteh & myself you choose to believe - i.e. it's more than a bit over-rated imo.
The 1990 side which Robson eventually found was Shilton, Parker, Butcher, Walker, Wright, Pearce, Waddle, Gascoigne, Platt, Lineker & Beardsley. Barnes played in several games, but not well and was replaced by the semifinal (I think!). Robson was injured very early on in the tournament. Gary Stevens & Trevor Steven didn't feature too often. The immediate problem in comparing that to the current side is the different formation - 3 centre backs, two wingbacks, 3 midfielders & two forwards. However, I'll have a stab at it. As you say, Shilton is better than any of the current crop, even if he was 40 by then. Pearce is criminally under-rated by many, and arguably our best left back since Ray Wilson. Parker vs Richards is probably too close to call. Our 3 centre backs in 1990 were actually very good indeed. Butcher, don't forget, played in 3 WCs without being shown up by anyone apart from Maradonna's 2nd in 1986, Walker was a quite superb defender, even if he tended to get a nose bleed if he strayed into the opponents half, and Wright was a bit like Ferdinand in that he was usually good, could pass a ball, but occasionally ****ed up. I'd take most of them in preference to our current back four, tbh. Gascoigne was several classes above anyone we have nowadays as a midfielder. Obviously Gerrard & Lampard score more goals, but their distribution & link play isn't within touching distance of what Gazza did at his peak. Or Waddle, who wasn't really playing as a winger in that lineup. Platt was a much less heralded version of SG & FL, as he played for Villa intead of one of the bigger sides, but he did the same as them and scored quite crucial goals in that tournament. tbf Platt vs either of the terrible twins is too close to all if either of the current guys is in form. It's also hard to make a call on the holding midfielder, as we didn't have one in 1990 due to playing 5-3-2. Up front, for all the hype, Owen + Rooney hasn't come to much yet. People forget how good Lineker was, and I certainly couldn't regard Own as his superior. Both were/are great finishers in pressure situations, but Lineker maybe gets the edge because he could regulaarly score with his head as well as feet. Rooney vs Beardsley is an intersting one. Rooney should go on to be much the better player, but Beardsley did play with Lineker far better than Rooney has with Owen to date. And I suspect that people forget how good Beardsley was in the second half of the 1980's.
OK, thanks for sticking with me so far. The point I'm eventually coming to is whether England really have more talented players nowadays, and I'm just not convinced that they do. They certainly have more hyped players, and they also have players that we see more of due to every single game being televised, but a lot of them are, imo, vastly over-rated. If I was going to pick a composite 4-4-2 lineup, it might look like - Shilton, Parker, Pearce, Walker, Wright or Ferdinand, Gascoigne, Waddle, Gerrard, Robson, Lineker and Rooney. Something like that, anyway. And even then I've cheated by bringing Robson back from injury to try and give the midfield some sort of balance. If he was injured, I'd revert to 5-3-2 and bring in Butcher. My take on the matter remains that, by the mid1980's, Robson had a superb bunch of players - imo stronger than the current lot. Some played well for him. Others, such as Barnes, often did not. Interestingly, Barnes' (and Hoddle's before him) poor performances were generally blamed on the player himself, whereas the current generation under-perform, the manager takes the cop. I think that's actually the reverse of the truth, but there you go. And maligned as he was, Barnes was still 100% better on the left than virtually anyone we've seen since. Anyway, I digress.
The other thing is about the relative success in 1990 being down to Robson (the manager). Sure he had his strengths, but the side that eventually excelled in that tournament was arrived at as much by luck as judgement. And the same happened in 1986. The saying at the time was "the manager's indecision is final", and there was much talk about the players coming up with the 5-3-2 formation that improved our performances no end.