Stan - I find this subject endlessly fascinating, but I'm not sure, judging from what you've written, that Jacoby has sufficiently taken account of the transformative influence of modern computer and internet technology. There's obviously lots of bad associated with the internet and other high tech devices - the breakdown of attention spans and the loss of collective memory, for starters - but, well, it is what it is. More importantly, I think we need to start looking at literacy as a dynamic rather than static quality. If we evaluate literacy in terms appropriate for the 1950s, then yes, there will appear to be a general dumbing down across the board. It's certainly true that fewer people read Anna Karenina, or Paradise Lost, or any of the other great classics. But technology has created a new form of literacy, and it's the one that we're going to have to deal with, for better or worse, going forward. It's not, I don't think, that writing and reading are on an inevitable decline, but rather that they're going through an admittedly rough transition that will produce winners and losers, both culturally and individually.  
 
Also, I'm always suspicious of arguments that take such a fond view of the past. Nostalgia can be a dangerous thing, and as good as the 1950s may have been culturally, they were still a time in which education was still a restricted commodity and women and minorities struggled to gain access to it. The highbrow may have dipped a bit, or a lot even, but more people have access to it these days, I think, and that shouldn't be overlooked.