I listened to a podcast a while back that discussed why the US shifting towards this approach (after a period of less constrained funding post WW2) has lead to worse returns on research investment.

The basic premise boiled down to: Scientists already want to work on valuable things, they just have different priorities. Understanding unknowns is motivation enough for them. But this makes the impact of their work also unknown, and scary to people who see that motivation as wasteful.

Making them justify ahead of time why their work will be useful, to satisfy the risk tolerance of financiers, means that they need to reduce that unknown before they even start, and potential impact with it.