In a post about why science is hard, Steinn SigurÃ°sson had the following to say_
I would also say, that despite the enormous career difficulties in science, the lack of professional opportunities and advancement, there is also a labour shortage in science - that is to say there is both not enough funding to do even the obvious tasks we know urgently ought to be done; and, there is also not the pool of talent available to do the tasks if the funding were available.
If I got 20 times my current funding, I could not find 20 times the number of students and postdocs with the skill to do tackle the problems I think need to be done. Double the funding and I could double the work rate, increase it an order of magnitude and we would have to spend it in a qualitatively different way, at least over the next decade while supply ramped up, hopefully, in response to a heavy demand.
I responded with a bit of a non sequitur_
Your comment about funding is funny, in a way, because as I understand it, that's exactly what happened in the early 90's. The NIH budget increased dramatically, and suddenly, there was a great shortage of students/trained techs, etc. (just as you described). As a result, a lot of that money was used to build up the infrastructure that has brought progressively more students into the sciences.
Fast forward to the present, where suddenly funding has leveled off and we're faced with the opposite problem. Too many grad students were accepted into the sciences, and there simply aren't enough faculty positions and jobs to go around. This leads to career post-docs (with shitty pay) and people dropping out of research left and right to find other work. This makes the job outlook crappy and will discourage people from choosing science as a profession.
So yes, it's natural that the system is self correcting, but it sure does suck to be a grad student or post doc right now.
Update:This post is somewhat off topic, but the comment thread has a fascinating discussion on potential ways to reform the system. I'm not sure I buy it, but it's good to hear new and creative proposals.