HAM radio is amateur radio, rules and frequencies are established with the goal of promoting amateur use. Emergency service use would be a professional use and are licensed separately. The statement that citizens are not allowed to encrypt traffic should instead say that HAM radio operators are not allowed to encrypt their communications in accordance with their license.

How so? Your WiFi broadcast is encrypted. Your cellphone signal is also encrypted. The FCC doesn’t bar encryption. https://www.govinfo.gov/content/pkg/CFR-2014-title47-vol5/pdf/CFR-2014-title47-vol5-sec90-553.pdf
Now this last point is only relevant for the US but generally laws governing radio transmissions are fairly similar around the world.

No, the racism is built into the uniform standard.