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This study from Canada helps to make the point concerning wasted dollars in the whole research cycle that might be better spent on actual science: Cost of peer review exceeds the cost of giving every researcher a grant
Using Natural Science and Engineering Research Council Canada (NSERC) statistics, we show that the $40,000 (Canadian) cost of preparation for a grant application and rejection by peer review in 2007 exceeded that of giving every qualified investigator a direct baseline discovery grant of $30,000 (average grant).
The article goes on to make the point that perhaps we should be spreading the funding around with the hopes of seeing more diversity and innovation in discovery.
It's just another example of the massive overhead and waste in the current system, and how some disintermediation of the control points just might lead to better science. We need some new models that better reflect what the new technologies have enabled.