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.
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.