You are forgetting that tenured researchers often need lots of PhD students to actually do their research. So that ratio of 8 PhDs to a tenured researchers could actually be pretty good.
You would forget that this would cause exponential growth: in a couple decades, a single lab could produce more people seeking tenure track than an entire country's worth of positions; there need to be smarter ways to provide the requisite labor for science, since this is clearly unsustainable praxis. Running a pyramid scheme of this magnitude is only going to cause an implosion—which we may already be witnessing.
That's a result of the funding model focused on small competitive grants. You could probably get at least as good research with a funding model that replaces every three PhD students with a student and a staff scientist. But then the society would have fewer PhDs overall, which would have unpredictable consequences.
