The theory of it doesn't really matter. How can you share encryption keys securely if all system is traffic is transparent? Ultimately, You might be able to temporarily reduce the attack surface, but you will always be massively mismatched.
The point is, a technical solution is a band aid solution for a technical elite happy to live half outside of "normal" society. The only way to convey similar protections on the rest of the population is through strong legislation.
Key exchange can also be secured. Ephemeral keys can make it difficult to sustain an attack on key storage at endpoints.
The everyday use of strong encryption would be a lot more than a "band aid." It would mean securing our right to be secure in our documents against any attack, legal or technical. It would become a right any individual could enforce against all comers.
This is exactly what I mean about an arms race. If an agency is legally entitled to access private keys, for example, through legalised hacking of your home computer via backdoors installed by cooperative corporations, you're back to square one. If the network controllers make the so-called metadata of who talked to who and when, they've got a heck of lot of data to start with. If the control as much computer power and as much of the world expertise on crypography as some people claim, maybe they can break crypto in ways that appear mathematically unlikely now.
Arms race. You cannot win with purely technical means when you fundamentally lack control over the technology.
No, really, there is no "arms race." It has a known terminus. If strong encryption were in widespread use, the race would be over. Even metadata analysis would become mostly useless. What's more, the week before PRISM was revealed, there were headlines about how China was all up in our trade and state secrets. Are laws going to protect against that?
You assert that the people "fundamentally lack control over the technology" and that just isn't true. Start with the fact that strong encryption was born in an environment where the adversary is assumed to be a state actor with unlimited resources. There is enough open security technology that surmising that our government or any other has an undiscovered technology with fundamentally different properties is like any super-weapon fantasy: There are no flying saucers at Area 51 and there is no hyperdimensional machine in the basement of Ft. Mead. They put their pants on one leg at a time like everyone else.
The point is, a technical solution is a band aid solution for a technical elite happy to live half outside of "normal" society. The only way to convey similar protections on the rest of the population is through strong legislation.