This is an ongoing discussion between my girlfriend (a grad student) and myself. I'm of the mind that the one of most valuable changes that could be made is to tie a school's accreditation (or more accurately, a given department's) to their tenure-track:phd ratio. If every school were required to maintain something approaching 1:1 in those numbers, the disproportion of phd's to open positions across the industry would eventually level out. likewise tying accreditation to a maximum ratio of adjunct faculty would force schools to increase tenure positions. Finally, grad students should unionize. In the grad student level, schools hold far too much power over student's careers with no moderating influences. Given the amount grad schools depend on their own students for duties ranging from teaching to research, this is unacceptable, and unionization is historically one of the few effective means of balancing the scales.
Have you thought this through? Approaching a 1:1 tenure-track-PhD ratio is not desirable. Universities can't just raise the number of faculty without a big increase in permanent funding. The other option would be to drastically lower the number of PhD positions, and then you can watch how your country slowly fades into irrelevance compared to the research that other countries are doing.
