John Bruce at In the Shadow of Mt. Hollywood has a number of challenging posts about tenure and its problems. For instance, John notes that departmental staffing can take a very long time to adjust to student demands. It's certainly possible to have a department full of tenured professors teaching classes with four or five students in them while in another department all the classes are completely overcrowded. Administrators would like to address the problem, but if you can't reduce the number of tenured faculty in department A, it's budgetarily dangerous to increase the number of tenured faculty in department B. So things just stay the same, and administrators make up the difference with exploitation of adjunct faculty. It is difficult to determine what the "legacy" departments are, though, particularly at a small school like Wheaton which has several departments that have only one or two members. Things change rapidly. When I started at Wheaton there was some grumbling that English had a lot of staffing (we're the biggest department, by one, over psychology) and not too many majors. A few years later, we have more majors than we know what to do with.
Obviously administrators would have a lot more flexibility in staffing courses if they weren't constrained by tenure. Administrators could also continually replace senior faculty with less-expensive junior faculty. The senior faculty and all the junior faculty who hope to become senior faculty (i.e., all the faculty in TT or T jobs) know this, and it is by far the biggest reason for the ferocity of the defense of tenure. Everyone fears that, were tenure eliminated, expensive senior professors would be fired to save money. And where would they go? How would a professor support him- or herself when let go at 53 so that a 'young turk' who got paid a lot less could be hired?
Now the non-academic sector seems to handle this problem fairly well, it seems to me -- in that there's not a gigantic number of late-career professionals constantly being fired to be replaced by cheaper new college hires -- but I honestly think that when professors think about the ending of tenure, it's this kind of result they fear far more than being muzzled for controversial speech.
But economic self-interest is not a particularly good defense for a practice as expensive as tenure. I do think, as I wrote previously, that tenure can save colleges money in many situations: I would certainly be lured away for more money more easily than I have been (i.e., I have thus far stayed) if Wheaton hadn't awarded me tenure. But the cost/benefit analysis is beyond my economic competence, especially since it is going to involve hard-to-measure things like productivity, insitutional memory, wisdom, flexibility, etc.
Thus it will be very easy for people to attack tenure. I can in fact imagine a successful movement to eliminate the practice at public universities: I don't think many people realize just how much middle-class anxiety and anger there is out there about college costs (and admissions, but that's another post). Because the financial system is set up in such a way as to deliver a strong financial punch to just about everyone who is middle class (i.e., if you make more money, you get less aid, and full tuition is so ridiculously high) a populist attack on "lazy" professors who get paid too much and can't be replaced, and who can be tarred (fairly, in many cases but certainly not in all) with the "anti-American" brush, could be quite a potent political force.
This is one reason why I find the Ward Churchills of the academy so despicable. They, like the journalists who abuse the hard-earned authority of their profession for fleeting partisan advantage, are eating the seed corn. When the whole system comes toppling down, the good with the bad, the 200 idiots at CU defending Churchill's violation of every professional norm will blink their eyes and wonder what happened, and it'll be the responsiblity of the younger scholarly generation to clean up the mess.
One of the big reasons for tenure and 'academic freedom' is to allow universities to be keepers of the light, protectors of hard-won real knowledge in the face of the tides of politics and fashion. I don't mean that academia has to be hidebound, dusty and boring (though a little bit of these things can be a useful counterweight to a culture that is very much in the 'now'), but there's a presupposition that it is worth listening to those who have spent their lives in study and teaching. When their pronouncements are no better than those of a below-average Op-Ed writer, the people start to wonder why they occupy a privileged position, and even why that position needs to exist. I have no problem with leftist or rightist or any other ideas occuping a refugium in academia, but they should be ideas of a quality that can't easily survive somewhere else. That Moron Ward Churchill does not meet that test, and thus he undercuts the existence of the very tenure system by which he profits.