Wow, I had not considered the deeper power shifts from this perspective.
The root the problem, I suppose, lies with public-key cryptography. We all know encryption is a good thing (unless you want to broadcast private information to the world), but encryption is useless unless you know who you are talking to. When someone comes to you in a ski mask and says, "It's me, your best friend", you probably want to see their face before you tell them any secrets - they could be anybody.
Online, though, how do we know who anybody is? The current answer, for better or worse, is TLS with pay-to-play domain registration and certificate authorities. Decentralized, peer-to-peer systems like PGP have never been easy for consumers to use. You can "off-road" encrypted DNS by running your own DoH server & installing self-signed certificates on your client devices, but that's not an easy option.
"My LAN is my castle" may work for some cases, but most of us conduct business with people all over the world, thanks to the internet. This is the primary use-case for most networks & computer systems.
I'm afraid individuals will continue losing the power struggle as long as decentralized identity systems remain obscure. We need something that's as easy and compelling to use as our current centralized systems. It needs to be something consumers can use it to secure their every-day communications, as easy as visiting an HTTPS web site or chatting with a friend on Facebook. I just don't know how we get from here to there.