This is my favorite essay. However, after reading your essay I hate to think of this as participating in a funding competition and exposing my own bias for cogent arguments. Nonetheless I hope this essay wins.
You would think science would have measured, solved, and optimized this funding problem. The only thing I would add is how to address a market failure, which is to unionize and collectively bargain with the funding agencies. Ultimately this all boils down to a monopsony. The solution to counter a monopsony is a union.
A monopsony is a market where there is only one employer or a market with just a handful of buyers. A town with a single factory (one university) can pay lower salaries to employees (academics). Funding agencies can pick any researcher to fund and that researcher has almost no other funding alternative.
There are many universities so there is some competition. But they also educate their own workforce and saturate the labor market. Any other corporation would be envious if they could get their employees to pay the company, even if it means taking out a loan, for their own training before the company hires them. I cannot prove that universities are also colluding with each other to suppress wages. They likely just call each other to determine the “fair market rate” for researchers.
You are right that science should be funded. But the employer is an abusive slave driver who acts as a middle man between the scientist and funding agencies. They also get a percentage of any intellectual property from the tax payer provided funding. The only way to achieve a “no proposal” grant process is through collective bargaining. Through a union.
I believe it is a missed opportunity for society when someone is highly trained in an esoteric area at their own expense, with just a handful of experts in the world, a master craftsman who then abruptly stops and quits science to work in an unrelated area.
Science is historically the playground of the idle rich. Henry Cavendish of gravitational constant fame was literally one of the richest men in England. Tycho was incredibly wealthy. He bankrolled his own research and hired Kepler as an assistant. Harvard got its endowment through a lottery. Bell Labs funded basic science research using Bell telephone monopoly money. The Perimiter institute comes from a Blackberry fortune. FQxI comes from an investment banking fortune.
But science is now industrialized and is mostly funded through governments and it is almost impossible for them to bust unions due to their own government rules. But universities are valued because they do bust unions. This is why I believe academics should create a union and their own universities. It would out compete all the other institutions.