The problem here is the lack of evidence that “deep literacy” really is in decline. Decline from what height? Starting when? Also:

The rise of deep literacy in enough people in early modernity — mightily aided, of course, by Gutenberg’s invention of movable type — was a precondition of Protestantism’s firm establishment and rapid growth, and its establishment was in turn a major accelerator of deep literacy in the societies in which it became the principal faith community, in large part because Protestants ordained compulsory schooling for all children. The Reformation found a very powerful engine in the establishment of these schools: Wherever Protestant beliefs spread, state-mandated education soon followed, each reinforcing the other.

“Protestants ordained compulsory schooling for all children” — all of them? Everywhere? I don’t think so. When and where did this happen? Perhaps Maryanne Wolf provides evidence for these claims in her book, but if so citations of some kind would have been useful. And in any case Wolf is not a historian. Here’s a widely-cited article from 1984 that asks about the relationship between literacy and the Reformation in Germany. The authors conclude that the early Lutherans weren’t especially interested in promoting general literacy — they devoted themselves to promoting catechesis in schools, and this was done orally — and relatively little progress was made in promoting general literacy until the Pietists in the eighteenth century became influential. And even then the achievements were modest:

Besides reorganizing and revitalizing school systems still suffering from the effects of the Thirty Years War, the eighteenth-century ordinances set targets gradually achieved over time. Indicative of the type of incremental progress that was made are some statistics from East Prussia, one of the poorest rural areas in Germany. The percentage of peasants who could sign their names rose from 10 per cent in 1750, to 25 per cent in 1765, to 40 per cent in 1800. Another sign of increasing literacy was the exponential growth in the book trade in the last half of the eighteenth century as the number of titles for sale at the Leipzig book market, the largest in Germany, increased by over 50 per cent between 1740 and 1770 and more than doubled between 1770 and 1800. To be sure, the increase in literacy and reading in the late eighteenth century was still spotty and varied widely in depth and intensity from place to place. Best estimates of school attendance in the second half of the eighteenth century range from one-third to one-half of German school-age children.

How much deep literacy could there be in an environment in which basic literacy was by no means complete — in some areas not even widespread? That’s just in Germany, of course; comparative study needs to be done to make a more general case.

You can’t effectively make an argument like this without being able to answer some questions:

1. How, specifically, do we distinguish deep literacy from more basic kinds of literacy?
2. Where and when have rates of basic literacy been highest?
3. What data do we have, for any of those places and times, to indicate the proportion of people achieving deep literacy (measured in relation both to basically-literate persons and to the whole population)?

Just to start. And I would ask a deeper and harder-to-answer question: For the overall health of a society, is it the number of people who achieve deep literacy that matters? Or is it the social and political influence of the deeply literate?