>They don't. That's why they have you submit a proposal.
Proposals which are identified as either worthy of funding or rejected.
If anything NPR's selective reporting is misleading. Obviously the overall cost would be much higher than the materials cost of $1k. More over, the treadmill wouldn't exist without the study itself. I don't have a problem with a source like having an NPR editorial or ideological agenda, but the way they twist things is highly misleading. If their case is good, it deserves a better supporting argument.
>It's the best way of funding basic (i.e. not immediately profitable) research.
It isn't difficult to imagine a world where a fisheries association or another large seafood concern voluntarily funded a relevant university study. Whether this would include treadmills for prawns, I cannot say.
Appeals to the status quo of state funded research as the only or best way to achieve outcomes requires a better argument. At best, I think you might offer arguments via pragmatism. It would be reasonable to expect that purely voluntarily funded research would produce different outcomes. As these pursuits would generally be directed towards creating positive economic outcomes, rather than political or ideological ones, we might also expect that these outcomes would be better along the metric of economic value. Politically funded research could reasonably be expected to better at achieving political or ideological outcomes.
However, these are arguments from principle. We would need to test it empirically for those caught in the Scientismic paradigm to accept the results. Under this model of argument, the existence of state funded research tampers with the results. We wouldn't know how a voluntarily funded research regime would function when competing state funds are polluting the pool. Researchers may find it easier to pursue state backed projects than pursue projects which would appeal to the value creation process. This is just one of the flaws in the argumentum ad antiquitatem approach.
>"It's the best way of funding..."