The problem is that good design actually increases the desirability of a lousy product proportionately more.

Suppose when you went to the supermarket every, say, can-opener looked perfect, like it was cast out of solid stainless steel. If some were actually much better quality than others - if some would last a week and some ten years - then you'd be in problematic situation. Our judgement depends on, as the article says, to an extent judging a book by its cover. If all covers are amazing, the world is indeed nicer looking but we are in a bit of a quandary.