I was hoping in the beginning that this would present some interesting new explanation for UFO ... hysteria, but it didn't really get there.
The argument from governmental incompetence isn't terribly compelling to me. The occasional leaks of vast cover-ups -- like the extent of the NSA's surveillance apparatus -- suggest that the government is in fact quite good at keeping sensitive information hidden from the public.
The UFO phenomena appears to me to track more closely with the rise of the extraterrestrial in popular sci-fi. It starts with the War of the Worlds radio broadcast in 1938, made even more compelling perhaps by the events of World War I and the technological advancements that would have seemed to be happening at break-neck speed at the time, and seen through the lens of a global tension as events began leading up to World War II. It was based on a story written in the late 1800s which was just another of many popular British invasion works of fiction at the time, just with an element of science fiction, owing to Wells' training as a science teacher.
From there we have the rapid progression of Twilight Zone, Outer Limits, Space Ghost, Lost in Space, Star Trek, Unsolved Mysteries, The X Files, and a whole pile of other shows, movies, comic books, and magazines. Frequency of UFO reports [1] seems largely US-centric and tracks pretty well with metrics like number of hours of TV watched [2]. It also correlates well with the most common locations for the sightings: in rural areas, who have in recent years shifted their interest in conspiracy theories from the great UFO coverup and towards QAnon and the deep state and all that.
So while the nuclear age may have inspired some of the fiction, it looks to me like it's the entertainment age that created UFO mass hysteria. For the people involved, any phenomena they experienced -- strange lighting, whether real or imagined, or sleep paralysis, or the delirious effects of a sleep aid, or, maybe, proximity to experimental aircraft -- would all be best explained by the fiction they were most familiar with: extraterrestrials.
As cultural interest has shifted towards domestic issues, and we have begun to explore space ourselves, and ubiquitous surveillance has spread to every person's pocket but has yet failed to produce any clear, incontrovertible evidence for alien spacecraft, reports of UFO sightings have likewise been trending downwards.
[1]: http://www.nuforc.org/webreports/ndxevent.html
[2]: https://www.theatlantic.com/technology/archive/2018/05/when-...
edit: as I was writing this, ~reggieband posted a comment to this thread that pretty sweetly exemplified my main points: he was watching a Joe Rogan podcast, and thinks that Bob Lazar is being duped into being a part of a government conspiracy to conceal classified aircraft.