Two points: (1) the worldwide most successful Universities have the tenure system; (2) higher education is no less competitive than other businesses. Harvard and Chicago compete with Universities worldwide for students and researchers. If the tenure system is so terrible how come nobody has entered this market and made it to the top?
If someone complains about executive compensation then libertarians are quick to point to market forces. How is this different? When it comes to Universities, libertarians all of a sudden fret about the contract choices of organizations in a highly competitive market. Could it have something to do with the political views of the University employees? Of course not. That would reveal an embarrassing lack of self-awareness.
This point has flaws as there may be strucutral issues that prevent corporations from moving into the Higher Education market as the conditions for an efficient market are almost certainly not met. However, it's also unclear that a sufficiently large pension plan for a senior executive is all that different in kind than tenure for an unproductive professor.
The idea of tenure as compensation is even more explicitly made by mathgrl:
I am ambivalent about tenure, but its removal does have some implications:
1) With tenure, I am free to pursue high risk research. Each project usually takes 1 to 3 years. With high risk, potentially important research, there is a good chance that I spend that time and have little to show for it... or I could change my field (which may affect your energy costs, carbon footprint, etc). The trend in research labs (notably Bell)--which do not have tenure--has been toward quarterly progress reports. They kill good, long term projects. With the removal of tenure, I could see universities heading down this path.
2) You will have to pay me much, much more. I work for far below market rates because I have the promise of security (tenure) and the ability to work on what interests me (to the extent that I can find grants to support this work). Right now, I work the same number of hours as an i-banker at 33-50% of the wages, while having superior training. If I am working every day in fear of being fired, you will have to pay me about 70-80% of corporate rates (on par with research labs).
Are those negatives worth it? I am not sure. The removal of tenure may be fine for some teaching posts (cf adjuncts) but it might cause long term problems if it is removed for research posts (higher education costs, lack of basic R&D).
I also made the decision to take a tenure track position. It actually was not a trivial decision to make as there were a lot of tough considerations. But it's absolutely clear to me that I'd have taken a corporate job in the absence of either tenure or a very long term employment contract. The ability to work on long term projects is the main benefit to me of academia and that's not going to be possible if only short term contracts exist.
It is also the case that the academic market is far from homegenous and it's fairly dangerous to make broad, sweeping statements about the employment practices across such a broad range of fields and institutions. But, that being said, it's odd that it is in vogue to attack employment contracts all of a sudden.
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