Here’s an article trying to look at the bad effects of the separation of church and state.
Personally I think the seperation is a good thing. I think it’s a prerequisite for the advancement of our civilization. Every religion breeds fundamentalism, or extremism, and as we’ve seen over the past thousands of years can be extremely violent. I don’t think I need to go into more details there. Having these same entities running the governments is too risky, given the power they would then wield.
I’m obviously not saying all religions are violent all the time, but considering this has been happening on a regular basis throughout history I think it’s a big risk. All it takes is one person at the right time – a charismatic leader using religion as a rallying cry, especially in response to some traumatic event, is a recipe for disaster. Religion is such an easy and useful tool for people like that to use, because even if most people don’t agree with the action being advocated, the fact that it’s “in the name of their religion” brings many more people on board than it would otherwise.
However, that doesn’t mean that religious values can’t be used an input to, or the foundation of, the values of a society that end up being encoded as laws. But the seperation needs to take place once the law has been written and agreed upon by society. An example of where this goes wrong was when Bush proposed the “faith-based initiatives.” This immediately implied that secular charities would get less money and were less trusted by the government.