Is the Jewish emphasis on literacy and education good for the Jews? No, it hasn't – if by "good" you mean continuity or retention. Because, despite the myth created by rabbis, requiring Jewish literacy to be a functional community member in good standing forced many Jews to leave – not just through the assimilation we all see today, but by willing assimilation going back almost 2,000 years, assimilation that happened whenever Jews and gentiles had good relations with each other. Why? Because the cost of educating a child was so expensive that many families could not pay for it, and those children and their children simply faded away.
Put simply, when the Temple was still standing, a Jew could be Jewish by being part of the Jewish nation and by offering minimal sacrifices three times per year at the Temple.
But once the Temple was destroyed, the bar was raised.
The Judaism the rabbis created required its followers to have knowledge and to act on that knowledge, and to do so without any semblance of a Jewish country with Jewish autonomy.
The number of laws increased, the cost of being Jewish increased because of the cost of the education required, and roles for those who were not literate and not educated faded away.
Steven I. Weiss writes in Slate.com:
…Botticini and Eckstein pore over the Talmud and notice the simple fact that it's overwhelmingly concerned with agriculture, which, in conjunction with archaeological evidence from the first and second century, paints a picture of a Jewish past where literacy was the privilege of an elite few. But these rabbis were also touting a vision of a future Judaism quite different from that which had been at least symbolically dominant for much of Jewish history to that point. Where a focus on the Temple in Jerusalem, with ritual sacrifices and the agricultural economy they required being the standard to that point, these rabbis—broadly speaking, the Pharisees—sought to emphasize Torah reading, prayer, and synagogue. When the sect of Judaism that emphasized the Temple—broadly, the Sadducees—was essentially wiped out by the Romans shortly after the time of Jesus, the Pharisaic leaders, in the form of the sages of the Talmud, were given a mostly free hand to reshape Judaism in their own image. Over the next several hundred years, they and their ideological descendants codified the Talmud and declared a need for universal Jewish education as they did so.
All of this history is widely known and understood, but what Botticini and Eckstein do differently is trace this development alongside the size of the Jewish population and their occupational distribution. The Jewish global population shrunk from at least 5 million to as little as 1 million between the year 70 and 650. It's not surprising that a conquered people, stifled rebellions, and loss of home would lead to population shrinkage, but Botticini and Eckstein argue that "War-related massacres and the general decline in the population accounted for about half of this loss." Where did the remaining 2 million out of 3 million surviving Jews go? According to them, over multiple generations they simply stopped being Jewish: With the notion of Jewish identity now tied directly to literacy by the surviving Pharisaic rabbis of the Talmud, raising one's children as Jews required a substantial investment in Jewish education. To be able to justify that investment, one had to be either or both an especially devoted Jew or someone hoping to find a profession for his children where literacy was an advantage, like trade, crafts, and money lending. For those not especially devoted and having little hope of seeing their children derive economic benefit from a Jewish education, the option to simply leave the Jewish community, the economists argue, was more enticing than the option to remain as its unlettered masses. Two-thirds of the surviving Jewish population, they assert, took that route.
This distinct twist of the population story, which accompanies research showing a shift from nearly 90 percent of the Jewish population engaging in agriculture to nearly 90 percent engaging in professional trades over that same several hundred years, addresses a key problem of previous theories of Jewish literacy: determining what happened to those who wouldn't be scholars.
Botticini and Eckstein bring other evidence of Jewish tradition generating success in trade. An extrajudicial system of rabbinical courts for settling disputes allowed for the development of the kind of trust required for commercial enterprises to grow. A universal language of Hebrew eased international negotiations. And in a devastating critique of the theory that persecution actually pushed this economic shift along, the economists examine the societies in which Jews originally developed this bias toward trades and find Jews faced no particular discrimination that would have made them less successful in agriculture. In fact, they show, Jews were often discriminated against precisely because of their emphasis on trade, such as in their expulsion from England in 1290, which only came after they were repeatedly told to give up the profession of money lending (eventually echoed in Ulysses S. Grant's order to expel the Jews from the territory under his command during the Civil War).
And so the Jewish people have grown into a people of two intertwined legacies: a culture in which the Jewishly literate continue to pass the torch and one in which an emphasis on trades was necessary to continue to do so for all but the most fervently devoted. When a given family stopped being devoted or wealthy enough, it simply faded away.…
[Hat Tip: Dr. Gershon Mendel.]