[dnautics]

your flawed assumption is that private companies are the only funding source. What about non-profit researcher foundations, such as HHMI? What you haven't seen is that in the past decade or two these foundations have been whittled away by the growing government behemoth. It used to be that every other graduate student was on some private grant or another, but now they are all written on RO1 NIH grants. With inflation eroding away at research endowments and faster-than-inflation growth in most laboratory equipment prices, a private research grant supplies maybe $100k a year, which is now insufficient to pay for even a research associate $50k + benefits, plus equipment. Plus, NIH gives research institutes "overhead" which is negotiated on a per-unit basis with each institute. So greedy-ass research institutes are not inclined to even allow their researchers to apply for grants which don't permit overhead.

When you have a line to an apparently unlimited line of credit, the practices are going to be wasteful because of perverse incentives (at the NIH they have glassware-breaking parties at the end of spending cycles to use up their budget because if they come underbudget they are at risk of having it reduced) and you are going squeeze out private (non-profit) competition.