They are only inefficient to a point. If, in Lisp|Perl|C|whatever, you write a recursive function that runs a few thousand times, then you're going to suck up some RAM and the stack-push/pop CPU time. LISP, Scheme, ML, and their compadres are pretty well designed to minimize this. But, if you write a tail-recursive function, you're fine; overhead is exactly the same as for iteration.
So it's all about how you implement your algorithms. Any language can be inefficient -
m/(a|b+)*/ being a simple example I can remember being horrible in Perl. Besides, though most style guides for functional languages don't encourage it, they almost all have iteration constructs, even if they're not popular. I know LISP does; I think Scheme and ML do.
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