Decisions about grants are made by experts, subject to peer review - it’s not subject to manipulation and it doesn’t pick winners

Overall, then, the system differs markedly from the simplified version presented in the critique of grants. Are government bureaucrats making uninformed decisions about what scientific projects get funded? Not really. It is true that staff and leaders at the NIH are involved in the process: the Center for Scientific Review processes initial applications and assigns them to review groups, Scientific Review Officers run the Scientific Review Groups in the initial peer review, NIH staff collates scores and prepares funding reports for the Councils, and NIH Directors or their delegates make the final decisions. But the key determinant of funding is initial peer review. Several scientists with expertise in the field read applications; determine how they fare on significance, investigator qualifications, innovation, approach, scientific environment, and overall impact on the field; and write up scores, critiques, and reasoning. Then those scientists meet, discuss the most promising grants, and decide their final scores - which projects are most worthy. That's mostly it. Grants are ranked, and the grants judged most worthy are funded until the funding runs out (with a bit of wiggle room).

While the process does not involve the market aggregating private information held by firms, it does involve the aggregation of relevant information. The grant applicants themselves disclose what they know of the innovation's potential value and their own capacities in the grant application. Peer reviewers see that information, have their own information about the field, and often can directly compare projects proposed by different researchers in the same field. And agency personnel can provide broader perspectives about government information. This process is a far cry from the notion of an uninformed bureaucrat simply sitting in a room and "picking [*30] winners."