THE ECONOMICS OF TENURE. As laid out by a self-described conservative mathematician.

Grant seeking and salary protection largely negate the "protection" to pursue work underappreciated by the broader community. As long as a significant portion of my income arises from research grants and as long as my yearly raises (and self esteem) are strongly dependent on the quality of my research (as judged by the community - not me), I have a very strong incentive to produce work that the scientific community highly values.

More positively, tenure allows me to pursue ambitious projects which have high possibility of failure. Andrew Wiles's dogged and ultimately successful pursuit of the Fermat conjecture gives a wonderful - but rare - example of tenure's support of ambitious but risky projects.

If tenure only rarely fulfills its putative role of promoting intellectual risk taking (at least in my field), what role does it serve? First, it lowers the cost of employment. Faculty exchange some salary for employment security. This is especially important in fields like mathematics and physics where there is a mythology asserting that your best work is done early in life. In sports, the expected diminution of talent with age is accompanied with early career salaries that suffice to fund the rest of your life. In academics, your employment is protected, but you are expected to redirect your energies to greater teaching and administrative work if your research productivity declines in later years.

That last sentence is not completely accurate: more than one colleague has joked about receiving tenure because a vacancy came up on an important committee, and it's not clear whether the research decline precedes or is precipitated by the tasks that get in the way of real work. Go read and understand the entire post. Note that the institution of academic tenure might have evolved to reduce transaction costs idiosyncratic to knowledge production, and accordingly ought not be overturned without careful thought about the consequences.