Timothy Burke nails the root problem of the tenure system:
Contemporary American universities are decentralized by their very nature, and by and large that decentralization is what allows them to be as excellent and productive as they are. Individual faculty and groups of faculty share very significantly in the management and custodianship of their universities and colleges. When that managerial share declines and administration becomes more centralized and hierarchical, the quality of a university falls in proportion to that shift.
Tenure was a stopgap measure designed to compensate for what was perceived as the increasing powerlessness of modern academics in their own milieu. It is difficult to convey to people who strange and upside-down certain features of our academic system are when compared to many prior stages of it: we live in a time where the people who are doing the actual work of education are not in charge of guiding education. This happens occasionally; it is not the only way to do things, and in general it has not been a way of doing things that works consistently. But it is the system we have: many of the academic systems we have are structured on the assumption that academics cannot be trusted, that they must constantly meet standards other than their own. Historically there were reasons for this, some very good, some not very good at all, but it is the system we have. Tenure was an attempt to reform things to return a bit of power to the academics themselves; chiefly to protect them from the regents and trustees to whom the college or university is beholden. How effective it has been in practice is difficult to determine, and seems to be a matter of some controversy; the tenure system for much of its history looks very much like the system it replaced. In any case, we can say that it didn't make things worse with respect to the problem it was intended to solve, and that, at least, is something. The real sore point in the whole tenure controversy is not whether tenure does what it is supposed to do but the charge that, as economics have placed pressure on the structure and organization of schools, the tenure system has created a system of haves and have-nots, and that as time has gone on the line between have and have-not has become less and less accountable to standards of real merit.
This is why the argument is not going to go away. I suspect Burke puts his finger on the strengths of tenure:
Where I do feel protected by tenure is with regard to institutional policy and action, in the autonomy I have to shape my courses, participate in governance, enforce what I see as due diligence, have opinions about administrative policy.
And this is a genuine strength. But we are in a stage of the argument where the strengths of tenure are precisely a sore point; one can't appeal (as some do, although not Burke) to these in order to argue for tenure, because it's like saying that the reason we need a large disparity between rich and poor is because somebody has to have health care, freedom to make their own way in life, and not have to worry all the time about how they are going to feed themselves. Yes, these are all strengths of being rich; they are not strengths of the system, though. And the strengths of tenure are not strengths of the tenure system. If in a political revolution you were to try to defend the status quo by insisting that there are advantages to being on top, that is the sort of 'defense' that would get you put up against a wall and shot. And when people appeal to the advantages of tenure in order to defend the tenure system, it just makes their opponents more angry. The only possible defense of the tenure system (if any is possible) is what advantages it offers even for academics who don't have tenure.
The ultimate problem, I think, is that both sides are trying to demand of the tenure system something it cannot in any case do. There is a deeper pathology, and the deeper pathology is the one identified by Burke. If that were to get fixed, tenure would soon be seen to work splendidly -- some would still complain, but overall no one would have a problem with it. If it doesn't get fixed, you can make all the changes you want to the rest of the system and it won't do a single thing. Unfortunately, every sign I can see signals that thing are going in the wrong direction: centralization, not decentralization, is the trend. The administrators are not always the culprits, it should be said (since it is often easy for faculty to think that they are, and it doesn't help that some administrators have a bad habit of thinking of themselves as the college or university, full stop, with any problems had by the faculty as problems between the college, i.e., themselves, and the faculty, who are somehow the college when convenient and other than the college when inconvenient -- you think I am kidding, but look for it and you won't have difficulty finding it); legislatures sometimes are, and sometimes the faculty themselves are (Dean Dad notes some ways). Some factors, perhaps, are such that sometimes no one is to blame. The result regardless is that the actions of those directly involved in the work of education are increasingly at the mercy of those who have a more remote connection to it, and the disparity of power this creates grows and grows.
And so the real question is how to fix the disparity. It's possible that abolishing tenure is part of the solution; regardless of how it should work, some argue, under the current conditions it only exacerbates it. I don't know; I confess that personally I'm indifferent to the tenure system in either direction. What I think we ultimately need are completely different educational institutions, built on a different model; unfortunately, I don't know how that can get off the ground. It could no doubt be done; universities first sprang up in one of two ways, either teachers getting together to pool resources and students, or students getting together to bring in teachers. How one would do it today is another question. It's a maze of mazes; I don't see my way through. I'm pretty sure no one else does, either: tenure defenders offer no genuinely workable solutions to the have/have-not problem, and tenure opponents always seem to propose as an alternative making the haves more like the have-nots, which is hardly attractive. The whole point of tenure is that it is supposed to protect the power essential to teaching and inquiry; what is needed is not a system that takes away that power but that makes its distribution more responsive to actual merit (whether or not we keep tenure as one means of distributing it). I see no proposed solutions that have any promise of doing this.