Suppose you were a politician in charge of shaping your country's science policy. Let's also suppose you are actually interested in promoting the welfare of the nation and humanity at large (hopefully not all politicians are driven by sociopathic greed, and after all, we are talking about you here). Let's also suppose that you are not entirely stupid. What kind of science policy would you make?
Presumably, you would not come up with the kind of ultra-shortsighted policy that the UK has now come up with in determining to weight research proposals' (short-term) 'economic and social impact' by 25% in assessing their merits.
The point with fundamental research, however, is that one just simply cannot make any reliable statement about its likely impact on society. When Dirac postulated the existence of the positron on the basis of his equation, he didn't think of positron emission tomography revolutionising cancer diagnostics. When Einstein described stimulated emission of radiation, he certainly didn't have DVDs in mind. And while Peter Grünberg might have had some applications in mind when he made his discovery of giant magnetoresistance, he probably didn't imagine the iPod (otherwise he'd be very, very rich).
The only research that will fare well under such a short-sighted policy is industrial and quasi-industrial research that has a clear product (i.e. a product that can be readily imagined with current knowledge) in mind. Such applied research is important, sure. But fundamental research is far more important for the overall progress of the human race, because it creates the foundations upon which the applied research of the future is going to rest. Moreover, applied research generates revenue for industry, and therefore it behooves industry to fund it. The government's job in science is the support of fundamental research that will not easily get industry support -- corporations are notoriously short-sighted, rarely looking beyond next year's balance sheet. The government should have more foresight.
Nobel Laureates are leading the fight against this silly policy; you can hear from Chemistry Nobel Laureate Venki Ramakrishnan at nature.com. UK-based readers can sign a petition against the silliness at ucu.org.uk.