Each tenured professor produces PhDs way above replacement rate. A tenure spot only opens when the Professor leaves academia, but during his career he produces dozens of PhDs. The system can't work out like that.

so waste taxpayer money on more positions which create more postdocs and grad students? Just kicks the problem down the road.

What if there's a limited social capacity to do science? As in, at any given time there's it's only worth it to allow some percentage of people to do science (and not all of them will be doing science). Throwing more money at the problem will only muddy the waters by drowning out the good voices with junk, and what you will see is thousands of journals, and more fraud and bad science percolating through the upper journals. Hmm...