What is the Cost of Tenure?

And what is the cost of slowly killing tenure, as a new AAUP report reveals. An InsideHigherEd.com article discusses the report. Here's a comment I made:
The assumption that tenure increases costs may not be true. Tenure protects job security and academic freedom, and as a result faculty are willing to accept the lower salaries of academe. Of course, that may not actually happen because colleges are engaging in two-tiered faculty systems: the highly paid elite with tenure potential, and the low-paid adjuncts. But there are several reasons why tenure might reduce college costs: 1) colleges have hired massive numbers of administrators to do the work that tenure-track faculty used to do (managing, advising, etc.); 2) the decline of tenure reduces the number and quality of people seeking academic jobs, increasing competition and costs for top scholars; 3) the loss of tenure-track faculty hurts students by making it more difficult to form mentoring relationships with their teachers, which increases dropout rates and hurts their education and job prospects; 4) the destruction of tenure is leading to unionization, which eventually will raise the costs of instruction. Tenure, in itself, is only a cost to academia if colleges are required to retain faculty in fields where they no longer have demand for instruction and cannot move these employees to other fields. To my knowledge, this almost never happens in a steady area like higher education. The fact that adjunct employees are exploited for lower pay than regular faculty has nothing inherently to do with the tenure system, except insofar that the lack of tenure makes it easy to fire union organizers. The bigger question, though, is what does the lack of tenure do to the quality of instruction, the quality of research, and the future of the profession?