You haven't made an argument that indirect funding is the best way to go

On this point we are in agreement. I'm not making any assertions about what the absolute best way is to fund research.

and you've made baseless claims.

Please be more specific.

There's nothing to respond to: the burden of proof is on anyone who claims that bizarrely indirect mechanisms through flawed actors

All humans are flawed. Were you perhaps under the impression that research grant applications get approved or denied by a gleaming crystalline logic-engine handed down to us by the Precursors?

Here is the 'bizarrely indirect' mechanism by which I am claiming industrial engineering motivates basic research. First, somebody approaches some engineers with a set of requirements that, at a glance, to someone familiar with the current state of the art, seems impossible or at least unreasonably difficult. Money is piled up, made available to the engineers conditional on them solving the problem, until they grudgingly admit that it might be possible after all.

The problem is broken down into smaller pieces: for example, to put a man on the moon, we need some machinery to keep him alive, and a big rocket to get him and the machinery back to Earth, and an even bigger rocket to send the man and the machinery and the return rocket out there in the first place. The Tsiolkovsky rocket equation puts some heavy constraints on the design in terms of mass ratios, so minimizing the mass of the life-support machinery is important.

To minimize life-support mass while fulfilling the original requirement of actually keeping the man alive, the engineers need to understand what exactly the man might otherwise die of. No previous studies on the subject have been done, so they take a batch of laboratory-grade hamsters, pay someone to expose the hamsters to cosmic radiation in a systematic and controlled way, and carefully observe how sick or dead the hamsters become as a result. Basic research, in other words, but focused on a specific goal.

would NASA ever under any circumstances admit this?

They seem to be capable of acknowledging errors, yes. Are you?

"It turns out what we did in Apollo was probably the worst way we could have handled it operationally," says Kriss Kennedy, project leader for architecture, habitability and integration at NASA's Johnson Space Center in Houston, Texas, US.

http://www.newscientist.com/article/dn11326