> they make it possible for people/entities who can afford to waste most money to get them instead of those first/lucky. But how is that a better outcome?

It's not "waste", it's the people who are willing to spend the most money, which are presumably the people who want/need the thing most, so it's better than allocating the thing at random.

> And why should this involve people spending more money, and all the delta going to the person who was first in line or in lucky position to secure a loan and buy off all the supply?

The person who makes a good judgement about what things are underpriced is selling a service to the market and earning their cut. A seller who's paying attention should see the rush and raise their prices (and ideally increase production to match that).