Ability to read does not correlate interest to read or more importantly ability to understand
Why is literacy important ? I don't think it is important at all.
it is overrated today, it was far more important in the days when mass communication was largely written. It is not longer the case, cost and ease of video and audio publishing is extremely cheap.
The issues in written communication are beyond production cost of writing, there are limits what can be described and how difficult it is do so for a large audience to understand, there is a reason why good authors historically were very influential.
It is also more volume limited than say even speech/audio, you can say lot more with lot more meaning(using non verbal and non lingual sounds) in the same time it takes to read.
Don't get me wrong, it is a wonderful format, but is no different than painting versus photography and now animation, you can do great art by working with the limits of the medium, but it depends on the consumer to use his "imagination" to understand. Just as paintings were actual tools of communication in a bygone era and are art today and can be appreciated as such so is written communication, it is not essential mass communication tool that people need to really learn anymore.
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It is far important to be able to critically think for yourself and question the information presented to you and be able to understand the mathematics needed to do the above and navigate life.
The need for widespread literacy is relatively new, of only few hundred, and was result of drop in the cost of written publishing which made it the most popular form of mass communications. More effective means of communication including speech and video have become cheaper and becoming even more cheaper with AI.
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This association of intelligence or critical thinking skills to literacy is flawed and frankly elitist it is merely a function of schooling.
I grew up in a country where literacy is a still a problem particularly amongst older generation not because they didn't learn properly in school because they didn't ever go to one.
I know just as many smart thinkers, world aware, inventors who are illiterate as I know dumb, idiotic literates. The country is larger, poorer than America yet has more robust political process that is diverse, with more involved electorate even if what the people want is at times authoritarian , there is no denying the robustness of democracy itself.
The difference is the uneducated would likely picked up literacy if they had the opportunity, what we have in America is people failing to learn despite given the opportunity to do.
The issue is deeper than literacy as a skill, it is a poor proxy for other skills actually needed in life and becomes more weakly correlated in the future .