it does, just more round-a-bout. The land does not have infinite value. If you overpaid for the land, you will have lost that value to the seller.

Therefore, these bidding is really just a price discovery mechanism. Unfortunately, because the transaction costs are high, and land being quite illiquid, the price doesn't rapidly converge to the "correct" one (aka, the true price might've moved faster than the bidding can catches up).

> does nothing for the economy.

Unless if the seller only ever reinvest into more land (and that seller also only reinvest into more land, ad-infinitum), the capital freed up from a sale will lubricate another sector of the economy.