There are lots of things people acknowledge government shouldn't fund. Successful companies. Hitler monuments. Gigli II. Uh....
Ok so that's about where it stops.
But of all things one group or another demands we drop, pure research is something that's hard to defend cutting because it's benefits are so uncertain. Thus the NPR report I heard today that criticized Mr. Bush's recent budget cuts on NASA and the National Science Foundation.
The report opened with how pure theory of Einstein's general theory of relativity is used to make GPS work. The theory tells us that as stuff goes faster, time for that thing goes slower. Since GPS satellites orbit so quickly, they are equipped with special clocks that literaly use a different unit of time to keep in accordance with its terrestial customers. We never know how science will help us, the report concluded (and that is true), thus government has to fund science (here I have a problem).
Let us set aside the fact that Einstein didn't develop his theory at NASA or the NSF. Hell, he didn't even create it in America. The lecture was given in 1915, after he worked at the University of Zurich and the University of Prague. He didn't move to the US until the 1930s. (Even if we assume these are goverment-funded institutions (Zurich is; I'm not sure about Prague), many other universities of equal or greater prestige are not. Indeed, since private schools offer greater freedom, most universities prefer to go private, assuming they could get the funds.)
Government funded science simply isn't neccessary for a well functioning economy. Private firm innovation, X-Prize style contests and academic research easily fill the gap. And even if some great idea for some ungodly reason isn't realized because of a lack of government funding, that doesn't mean we won't benefit from it eventually.
Suppose Einstein really needed public money to develop the theory (maybe money becomes enchanted with some brain-enhancing invisible wave if it's taken as tax dollars). Decades later, the first GPS satellites go in orbit and the firms realize something is very strange. The times between here and space aren't in sink. After intense research and theorizing, they come upon Einstein's conclusion anyway. No public money spent. Necessity is the mother of invention.
Would it have taken longer? Sure would, but we wouldn't have had to fund all those projects that concluded really intersting stuff though wouldn't have a practical value for decades to come. And we could have used that money to make our world better today.
It's like when people say the $118 billion (2000 dollars) that NASA spent on the Apollo program was worth it until I point out that money probably could have been used to make huge leaps in fighting cancer.