On this day, economists mourn all the social welfare that has been lost
in the last year. That social welfare is lost and we will never get it
back.
Deadweight loss is the loss of social welfare caused by that dreaded
demon, inefficiency. Examples are monopoly and externalities and taxes. To learn
more, go the following link:
Deadweight_loss
One good way to commemorate this day would be to cut out the deadweight
loss triangle from a monopoly graph (like the one shown below) and burn
it, to symbolize all of the lost social welfare. Doing so is both a
life-changing and life-affirming ritual.
The green area is the consumer surplus and the red area is the producer surplus under monopoly. Add them together and you get social welfare. But if we had competition, social welfare would also include the yellow triangle. So there is more social welfare under competition and what we don't get under monopoly is the deadweight loss.
See also The Noise-to-signal Ratio as a Metaphor for the Deadweight Loss of Taxes.
See also Why High Taxes To Pay Back The Debt Might Be A Problem For Economic Efficiency And Future Economic Growth. I show graphically how taxes cause deadweight loss.
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