Literacy Log 1 - I don't get it!

What is literacy? This question is deceptive, as all simple questions are The dictionary definition of literacy is a person's ability o read and write. Immediately however, his raises several more questions. What does it mean to be able to read, and what level constitutes "reading"? Should the literate person be vaguely familiar with letters and the ways in which they combine to form sounds? In that case, my six-year-old cousin is literate. Or should a literate person be capable of reading something as complex as "The Count of Montechristo" or the entirety of "Les Miserables"? Does being literate include a working knowledge of literature? And then what of literary history? And these are the easy questions; if I start asking what it means to be able to write, this paragraph will be extremely long (is knowing the standard length of a paragraph included in literacy?).
Coming into this discussion, my ideas (or preconceived notions, perhaps) are thus: a literate person can look at written symbols in a given language and recognize their meaning insofar that they understand (if without knowing that they do) its grammatical structure and a follow general gist of the text. Also, a literate person has probably undergone a certain amount of formal or informal schooling to arrive at this skill-level.
As I go through my day, I encounter words. The DUC worker's tool box says "ORKIN" on the side, and I only need a quick glance to know that, it seems, almost without the effort of thought. A kid's shirt on the street reads "DUKE". I read academic papers for classes, as well as textbooks and literature books. I also read statuses on Facebook and e-mails from friends, work-colleagues, automated systems, professors, class mates... I read webcomics and blogs, directions for setting up a bookshelf or a wireless modem so that I can have internet. The written word so surrounds me that I don't even think about it as such, unless it's to bemoan that my eyes, my synapses move too slowly for me to be able to take in the 150 pages of reading I have to do for the day after tomorrow. It takes something out of the ordinary for me to realize that reading is a skill I acquired at some point in my long-seeming life. If you udenrsatnd tihs anoniyng setnnece of mnie, tehn yuo mgiht be fimailar wtih waht I'm aubot tlak aubot. An e-mail circulated a few years ago claiming that, if the first and last letter of a word were kept the same, it didn't matter how you scrambled the middle letters, you would be able to read it just as easily as well-spelled English. This sort of word-play aside, my verbal abilities are second nature to me, and while I can think of literacy-events in my life without batting an eyelash I am very certain that there are many things in my life affected by my own literacy that I don't even realize.
It seems so clear-cut to me that I think the first question that needs to be asked, the first idea that needs to be justified is this: does the word "literacy" need to be redefined? After all, that is the basis of this class, it seems: to figure out what it means to be literate. I confess, I do not find this to be a particularly prepossessing question. If you can read words written on a surface, if you can write words and form them into meaningful thoughts, you are literate. The end. Every other question that we have posed as a class as to what literacy means appears, to me, to be not a question of literacy, but rather of knowledge. It seems to me that we have been exploiting the word literacy as a metaphor for being able to extract and convey information in as many possible different situations as we can think of. In one way, that is fair, since the very basis of language is attempting to codify information using a commonly understood pathway so that others may then decode that information. The term literacy includes the idea that one is able to do this. However, in using the word "literacy" to think about that idea alone, we ignore the other, vital, part of its significance, namely its specific reference to the written word.
In all fairness, the New London Group has a point when they talk about understanding that the first world's current culture uses images as a sort of language, an that people need to achieve literacy in that language to be successful in their lives. But I would like to argue that the other types of literacy (they call it design) they mention, namely spatial, visual, audio, and gestural are simply things that people have been manipulating for centuries, as part and parcel of our natural environments, and that one will pick up as the child of a culture without the necessity of specific schooling. If I may be so bold as to make yet another statement of semi-informed opinion, social understanding is not literacy. It is culture. To call it literacy is calling cultural knowledge by another name. There is no need for such misnomers, and indeed, this is only one aspect of general knowledge of how the world works that has been suggested as “literacy” in the past two weeks. If literacy means everything from knowing how to dress in a certain situation, to knowing how to greet someone, to being able to read a textbook, to knowing all the details of tree-husbandry, to knowing all the ins and outs of the Belgian legal system (and these are tame examples), then what, in fact, are we discussing? Let's just call literacy a synonym for knowledge, and a literate person a discerning Jack-of-all-trades, and be done with it. It is possible that I have missed something in this class- maybe I am not understanding the readings fully, or lack the discernment to understand the issues at hand, but though I have found the discussions of how knowledge and standards of knowledge differ across societies, cultures, and social standings fascinating, I am still not convinced that the dictionary definition of literacy is somehow insufficient or incomplete. What seems to be the problem? Why are we framing the changing importances of different kinds of knowledge as lack of literacy?