What is economic waste? Why is it important?

We live in a world with scarce resources. In other words, wood is scarce, steel is scarce, human labor is scarce; our resources on this planet are not infinite.

When these resources are applied to things that are demanded MOST by consumers, you don't have economic waste.

Economic waste exists when our scarce resources are applied to areas that are NOT in high demand by consumers.

Profits and Losses tell us where resources should be applied. When you see high profits, you see the marketplace providing a signal that this is an area of high demand.

When you see large losses, it is also a signal. But this signal says that this is an area of low demand. Resources should be removed and applied to where demand is higher.

In order to have Profits and Losses, you MUST have Prices.

In order to have Prices, you MUST have Private Property.

Capitalism is a system that contains Private Property, Prices, and Profits and Losses.

Under Socialism, there is NO Private Property, hence NO Prices, hence NO Profits and Losses.

It's obvious why one works, while the other fails.

Economic Waste Definition

Economic Waste in Property Insurance can be said to be inability of an Insured which has been indemnified failed to enjoyed the position (s)he was before an accident or a loss occurred. E.g, the time it will take to construct a new building.

By economic waste, do you mean deadweight? Deadweight loss is money that could be going into the economy, but because of certain market restrictions or externalities, that never happens. A decent explanation of deadweight loss can be found on Wikipedia at http://en.wikipedia.org/wiki/Deadweight_loss