I think it's a bit exaggerated. Certainly the _average_ assistant professor isn't denied tenure: that only happens in about 10-20% of cases as I understand it.
I'd agree that it's a little bit exaggerated. And yet... I'd claim that the real reason why "only" 20% of assistant profs are denied tenure is that the system now weeds them out at the postdoc level. It's now considered normal to require candidates to perform multiple postdocs before awarding them a tenure-track position. The only sure way to escape that treadmill is to write your own grant and get it funded... which, by no coincidence at all, is also the secret to being a successful assistant prof.
You can count the number of first-year grad students per year. You can count the number of graduating Ph.D.s per year. And you can count the number of tenure-track openings per year. And then you know the percentage of people who will eventually leave, or be kicked out, of academia. The rest is detail.
Most of us leave. For a motivated student to be forced out is kind of rare. They're quite happy to have you. You're really, really cheap.
Problem is, leaving after a couple of years of a PhD program is the academic equivalent of chewing your own leg off, and most people won't do it -- even if it's the right decision.
You have to be exceptionally mentally strong to leave that culture without grabbing the brass ring, and even then, it can haunt you with feelings of failure and inadequacy for years (people like Jerry, Larry and Sergey are the obvious exceptions.)
http://incoherently-scattered.blogspot.com/2008/02/how-commo...