For discussion, see here, here, and here. I want to highlight one important point that Brian Leiter makes in the last of those three links, namely that tenure is a form of non-monetary compensation, and that academic salaries would likely skyrocket in its absence.
At least the first half of this claim is, I think, obviously right. The average tenure-track academic has spent nearly a decade in graduate school during which he or she did full-time work for a salary barely above the poverty line, then endured a brutal job market resulting in a stressful and often thankless job, likely with a salary that’s about half that of his or her friends who bailed out of academia and spent a measly three years in law school. I’m not complaining, of course! – but let me just say that this arrangement is made significantly more attractive by fact that those who make it through the crucible don’t have to face the usual worries about getting fired when times get tough or the management shifts around. Would many academics be doing this anyway, if the pay were still poor but the job less secure? Speaking for myself, probably yes, which is part of why I’m not quite sold on Leiter’s claim that the abolition of tenure would have “astronomic” impacts on the costs of hiring faculty. (It might just as well make it so that the overall quality of the professoriate was not as good.) But the prospect of tenure does do quite a lot to offset the various things that might otherwise steer people away from careers in academic, and it’s important not to overlook that influence.