In that context unemployment insurance taxes merely cut back on some economic growth (we both hire fewer widget makers) in order to allow some widget makers to maintain their consumptive spending in a downturn. Rather than a short but serious downturn we end up with longer but less disruptive downturns. The social value is that rather than move to find new work, the unemployed widget makers can weather the downturn while maintaining family and community ties.
Read that sentence carefully. I fail to see any value. And if there is a value, then private insurance can fill that value more efficiently and more appropriately than government.
As for the question of over investment or over production, the reason entrepenuers make more and larger errors is access to capital and artificial demand. Inflation of the money supply by government and too much credit creation fostered by government through the federal reserve increase the misallocation of capital. No one knows what the business cycle would actually look like without government interference in the free market because it has never been tried. But no one can misallocate resources or disturb the allocation of resources to a greater extent than government. Free markets are going to be much closer to a true and proper equilibrium than any other method of allocating resources simply because the largest possible number of participants will be involved in the decisions. And the decision makers will be making those decisions with fewer distractions caused by changes in the supply of money or credit. More decisions, less noise, fewer mistakes and the magnitude of each mistake will be predictably less; by definition, the frequency of the business cyle will be longer and the amplitude less. Most of the adversity of the business cycle is caused by government, not business. And the corrections will be simpler, easier and more beneficial. Entrepnuers will be more likely to learn from their mistakes and from the mistakes of others, but only if someone suffers the consequences of those mistakes. Perhaps you have not considered why people keep repeating the same mistakes. How else can the same people keep going bankrupt, but continue to keep finding sources of capital?
Banks that can fail will be a lot more cautious about lending to you to build widgets in a free market economy where you, your employees and the bank itself can all fail without recourse from anybody. And you will be a lot more careful about building wiget factories when you are using your own money as opposed to "OPM". I suggest you spend some time reading Murray Rothbard on the free downloads availabe from mises.org.