Christianity flourished for centuries, though, when the literacy rates were much lower even than what they are now. The Latin-speaking Western Church elites told the illiterate masses what to believe, and the masses filtered the official theology through their folklore.
I wonder whether high literacy is an unconditional good. With that literacy comes critical thinking skills, which undermines religious faith and tradition, and that might be bad for social stability. So maybe there's some wisdom in limiting college-level literacy rates to a minority of jaded elites. Why burden the majority with the meta problems that arise from a surfeit of thinking? Why disturb the ignorance that's blissful?
I'm being a little facetious here, but these are still genuine questions. Leo Strauss addressed them in interesting ways.