I wrote a careful essay on the nature of literacy in 1998; you may read an updated version here. At one level literacy involves just learning to read and write, using whatever teaching methods work — and that is always a combination of methods. (The whole-language VERSUS phonics myth is just that, a myth; it is rather whole-language AND phonics.) Conservative critics always focus on one end of this, and berate schools if 100% of students have not mastered basic literacy by, say, the end of primary school — a great aim, but an unrealistic one.
There are ALWAYS, whatever you do, going to be those who do not master reading and writing as well as we would like them to, just as there are those who achieve literacy even before going to school. Of course we all want an outcome that allows all those who can be literate to be literate; no quarrel there, but let’s stop nonsense such as bleating about 25% of students being "below average" and let’s stop imposing standardised tests, or at least let’s stop tying too much to them, or regarding them as anything other than potentially useful diagnostic tools.
A bit less time spent on testing and bean-counting and a bit more time, funding, and effort dedicated to actual teaching and teaching environments might do a lot more good.
But there is a type of literacy conservatives not only do not talk about but positively discourage: critical literacy. My belief is that this is so important that a democracy cannot function without it.
Here is someone who knows why.
Vanessa Andreotti is a Brazilian teacher/trainer who is currently a research fellow and education coordinator at the Centre for the Study of Social and Global Justice at Nottingham University.