There are really only two ways out: labor struggle or cooperativization. I recommend the latter, on grounds that it's actually the model traditional universities used: the faculty ran the university in check and balance with the trustees, who made ultra-high-level administrative decisions on behalf of the public and the future. There's no reason not to simply undue the neoliberalization of academia and go back to the proven model.
In fact, and I want to EMPHASIZE this, the only reason any shift ever took place away from the proven model was a concerted political attack against academia during the Culture Wars. Whatever you think of my obviously left-wing views in general, you have to admit that until politicians started getting elected on a platform of Stick It To Students, academia ran very well as a public institution funded by taxpayers and capital-asset grants (like land-grant colleges in the USA) and accountable primarily to voters, donors, and academics themselves.
This reminds me of my current place of employment. A minor perk at many offices is a reserved parking space. Before my time (90s, early 00s) the head of the organization had a reserved spot, the rest were for the top engineers with some spots rotating out based on quarterly or annual awards. In the early 00s the other managers began whining and eventually got their own reserved spots. With 100+ reserved spaces at the front of the lot someone realized they'd gone overboard. So they removed the engineers' reserved spots.
It's the Marxist description of capitalist employment, so you're supposed to be reminded of your day-job.
 US since I shouldn't assume anything about my audience.
 I'm speaking about this facility, can't speak to government operations in general.
Tenure level academia is demanding:
a) Once you've made it, you have a solid reward: a sustainable lifestyle salary, freedom to work on what you wish, and, notoriety.
b) To make it, you have to work insane hours for about a decade or more (PhD, post-doc, 5-years) -- where the first few years (5-8) pay very little, if anything.
c) The odds of making it are against you -- many drop out in their PhD ("ABD"), fail to get post-doctorate work, fail to get a tenure track slot, or, fail to get tenure.
The promise of tenure is the carrot that feeds expectations that can only be met by talent and hard work.
... and luck. Many talented and hard working people don't get tenure.
This is not a recipe for social stability, e.g. enabling staff to raise families, etc.
When the system goes this far, I'm sorry, but I have no other word for it than "exploitative". (This is without delving into the topic of student debt, etc.)
P.S. And many people spend an inordinate amount of time commuting between multiple part-time instruction gigs.
I completely agree that the odds are low for most people pursuing PhDs obtaining a tenure track position.
I'm somewhat hopeful that PhD study will become a sane and respectable choice for people who don't have a tenure track career goal in mind. But for this to happen, the nature of PhD study needs to embrace the idea of a "terminal" PhD. And in all honesty, I suspect that a terminal MS with an appropriate thesis tacked on is more than sufficient to satisfy that itch.
Jeff Selingo (http://www.jeffselingo.com/) writes extensively about how colleges are reacting to changes in demographics and technology. He doesn't think Yale or Harvard will need to change, but the public and private schools a tier below will need to. His book (http://www.amazon.com/College-Un-bound-Education-Students/dp...) is a good read for parents.
There are two roles for Tenured College Professors:
* Making intellectual bets that might not pay off for decades
* Making Graduate students work hard
Just pay up the money, and make the empirical sciences better paid. Its like a magic machine is edication. Put in money get out more.
If you want to see my poster-child for College Professors (#) go http://www.youtube.com/watch?v=Sddb0Khx0yA.
(#) No, not that Playboy spread. Different poster.
Even for undergrads with no desire to go on to do academic work, it's a good experience to work on a well-defined but hard problem that fundamentally might have either no solution or where the answer is "that doesn't work." It provides undergrads with confidence when they go on to their next job because, frankly, most students will never encounter anything as mentally challenging or technically risky in the rest of their career, entering it with a BA/BS.
Not saying that as a bad thing. Companies (startup or established) have plenty of other risks and challenges (social, business, process, quality, integration, dependencies, schedule, etc.), but the pure technical "is this even possible?" ones are the sort of thing you don't sort out mid-flight with a full or even partial team staffed up --- though you might have some PhDs (Google model) or 15+year veterans of the area (MSFT model) working alone to figure that out before you ramp up a full project.
If you want to get university or country success compared to production of tenured professors, its becomes even further complicated. I would argue that the opportunity for collaboration and funding for students and equipment is close in importance to skill of the tenured prof. This is probably what you are saying with paying more to the empirical sciences (along with more tenure spots) - and I agree with you on that.
The reason I posted is as an interesting addition to the common conversation on HN of the role of academics. I think a tenured professor is a quite good job and role. In contrast, nontenured senior academics are IMO not that well compensated (salary or otherwise) for the amount and skill of work they do, at least compared to industry or entrepreneurship.
(Background: I am a PhD student, but looking at entrepreneurship rather than academia long term. I find it concerning the number of my friends and colleagues planning academic careers vs the number of positions that will be open).
Thanks for the TED link, I hadn't seen this one and its a very interesting field. I'll have to restrain on comments to keep this on topic.