The Future of Obamacare

Well to some extent it has, regardless of how small a step, it was a step to greater equality in the United States. I am not necessarily the firmest believer in government intervention in regards to healthcare, but equally the position American citizens are put in due to the corporate greed and lobbying power of pharmaceutical and insurance companies is an equal evil.

The Patient Protection and Affordable Care act did not go as far as Obama had wanted it to go. However, it has allowed millions of American cover that they otherwise would not have. One would hope that in the worlds super power economy, people do not have to make a tough decision between putting food on the table for the family or having health insurance.

Moreover, it did not lead to the fears of its opposition, as the cost of healthcare in real terms has not increased. The fear now however is that any foundation laid by the act will be undone by the future policy of the Obama administration, in that the specific protection for the Pharmaceutical lobby.

Stiglitz has pointed out the case of how India was forced to take up patent law in 2005, due to the competition Indian pharmaceutical companies were bringing to drug production, and in that the western pharmaceutical lobby’s fears that competition from the generic market. In the 1970s India abolished pharmaceutical patents, and this lead to an industry, which would be capable of providing some degree of healthcare in the developing world.

The Obama administration is seeking a bi-lateral trade deal with India that will ultimately secure the position of the pharmaceutical companies. Critically, along with Obamacare, it is clear that there needs to be an overriding framework that ensures that care and medicine is affordable. Stiglitz argues that this is not an unintentional outcome of the trade deal, but rather an explicit element of US trade policy. Thus, we come back sadly to a trade off between the US and its desire to keep domestic jobs, and protect a well-lobbied industry.

The argument that the rigorous American patent system is ensuring profits for innovation and development is becoming worn out. Stiglitz gives the example of Hepatitis-C treatment, which in India goes for $1,000 per treatment with profitability, but in the U.S. for $84,000. This chasm in prices shows the degree of monopoly power that the U.S. government grants in the healthcare industry, and this bi-lateral trade agreement will only reinforce this if India strengthens its patent laws.

So it is increasingly clear that healthcare in the United States can be approached from a more critical angle, rather than still trying to force an act through that lobbyists call communist, but your rational person would call equitable.

Moral Dilemmas, Choice, & Economics

We often delve into behavioural economics when looking for depth in microeconomics analysis. This ties in with moral dilemmas as it is all ultimately down to the choices we make. To start off the Heinz Dilemma and Hobson’s choice will be considered.

Heinz Dilemma

In the Heinz Dilemma Kohlberg suggests that there are always six possible approaches to any problem encountered. Consisting of obedience, self-interest, conformity, law-and-order, human right, and universal human ethics. There are a few examples of this dilemma, which are well known but I will be using the original example.

In the original example the story is as follows:

“In Europe, a woman was near death from a special kind of cancer. There was one drug that the doctor’s thought might save her. It was a form of radium that a druggist in the same town had recently discovered. The drug was expensive to make, but the druggist was charging ten times what the drug cost him to make. He paid $200 for the radium and charged $2,000 for a small dose of the drug. The sick woman’s husband, Heinz, went to everyone he knew to borrow the money and tried every legal means, but he could only get together about $1,000, which is half of what it cost. He told the druggist that his wife was dying, and asked him to sell it cheaper or let him pay later. But the druggist said, “No, I discovered the drug and I’m going to make money from if.” So, having tried every legal means, Heinz gets desperate and considers breaking into the man’s store to steal the drug for his wife.”

From this there are six choices that present themselves so Heinz. I am going to list them from the example so we can get to the economics of it:

  1. Heinz should not steal the medicine because he will be but in prison, meaning he is a bad person or Heinz should steal the medicine because it is only worth $200 and that is not how much the druggist wanted for it; Heinz offered to pay and has no intention to steal anything else. (Obedience Example)
  1. Heinz should steal the medicine because he will be happier if he saves his wife, even if he serves a prison sentence or Heinz should not steal the medicine because prison is awful and he would languish greater in jail rather than his wife’s death. (Self-Interest Example)
  1. Heinz should steal the medicine because his wife expects it and he wants to be a good husband or Heinz should not steal the drug because that is breaking the law, he is not a criminal and he has done everything in his power so is blameless. (Conformity Example)
  1. Heinz should not steal as it is illegal as described by law, or Heinz should steal the drug for his wife, take the punishment, and also eventually pay the druggist. (Law & Order Example)
  1. Heinz should steal the medicine because everyone has the right to live regardless of law or Heinz should not steal because of the druggists right to fair compensation. (Human Right Example)
  1. Heinz should steal the medicine as saving a human life is a more fundamental value than that of property right or he should not steal the medicine because others may need the medicine as desperately. (Universal Human Ethics)

Through considering the variety of choices we have various equilibriums. The question we might want to ask is which is the optimal scenario. One may quickly realise there is no obvious option if you take it from a moral standpoint, but if we take it from an economic perspective we can examine the marginal private benefit, marginal social benefit, marginal private cost, and marginal social cost. This is due to the decisions at times having an effect on a third party that is not involved in the original transaction (that is the choices present to Heinz considering the druggist). Moreover, we can consider the Pareto efficient equilibrium considering who will be better or worse off.

In the first part of the obedience scenario Heinz is not necessarily worse-off as his wife is going to die if he does nothing, and there can be no Pareto improvement, as it would involve the druggist no longer having the drug. Would society be better off if Heinz steals in order to save his wife’s life? Since the disease is rare and special we may assume there is no demand other than Heinz’s. However, in this justification we encounter the potential problem a pharmaceutical company may face. In that if they go about developing a special drug surely they deserve some kind of compensation other than benefitting society. This to an extent depends on one’s economic view, whether we care more about the individual or society.

In the third example giving us conformity, it would seem to be the neutral equilibrium if he were to do nothing as mentioned above. If he were to conform in a sense to his wife’s demands he is not conforming to the norms of society so we come back to the issue of whether we consider societies or the individuals’ welfare of greater importance. In the fourth example we may argue that law in any sense is restrictive, and should not be needed for society, because we should be able to provide a social framework that would create an understanding for these scenarios. What if Heinz steals the drug then pays the druggist, should he still go to prison? I would argue that there is no longer a need for the law stating he should go to prison provided he pays for the drug as he has enacted a social framework not requiring the law to be in place.

The fifth example brings up the issue we may find with patents. Does an innovator deserve compensation for his work through price setting power? In this case the druggist has enacted monopoly power by price setting. As the druggist charges $2,000 when it cost $200. Then we have the inelastic demand, as Heinz effectively needs the drug and has no other choices available. This is a clear abuse of power that is afforded to the druggist through property right, and is not increasing anyone’s welfare. The druggist could take the $1000 offered or take the payment in full later, but chooses to be bullish due to the position held.


 

Hobson’s Choice

This is a special case of take it or leave it choice, whereby there is a false perception of free choice between any good. Thomas Hobson who owned a 40-horse stable where customers hired the horses developed this theory. Seeing the 40-horse stable suggested the variety of choice available and the perception there was free choice, however the condition was that the horse nearest to the door of the stable was the option and the other option was to have no horse at all.

An ultimatum game is effectively a form of Hobson’s choice, taking the classic example of a pot of money being split by two people with one person the proposer and the responder, as the proposer gives a take it or leave it choice. Results in this game often depend on the type of society it is tested in. Below is an example chart of this trade-off, noting that people believe that a 50/50 split is fair:

Screen Shot 2014-12-03 at 00.56.39

In Hobson’s case this ensured that the best horse was not picked every time, allowing that horse to rest in order to maintain its condition, while forcing the user into a choice. This may mean that in the long-run there are better quality horses available for riding, however in the short-term the consumer has been mislead about the opportunities available. Therefore, it comes down to the quality of horse presented to them at the door as to whether they take it or leave it.

Sources:

Kohlberg, Lawrence. The Philosophy of Moral Development: Moral Stages and the Idea of Justice. San Francisco: Harper & Row, 1981. Print.

Graph:

COREECON PROJECT

Copyright Almog Adir © 2014 · All Rights Reserved · My Website

The Failings of Price Mechanism

The free market is defined by the allocation of resources based upon the functioning of the price mechanism. This takes into account the equilibrium between demand and supply schedules. In this essay I will argue that while the price mechanism may be efficient, there are cases where it fails. Specifically focusing on the case of monopolies and then market failure whereby there are externalities.

The price mechanism does provide efficiency, through the price signaling created by demand and supply schedules. This brings us to a point of equilibrium that is Pareto optimal as neither consumer or producer can be better off without the other being worse off. Furthermore, at this equilibrium we also achieve allocative efficiency, suggesting that there is the best allocation of resources possible. This is shown through the diagram below, at the equilibrium of Qe – Pe.

Equilibrium

We may note that there is producer and consumer surplus, this defines our parameters of Pareto efficiency, any move from the market clearing equilibrium either the producer or consumer may be worse-off. This is limited by not considering the type of market structure that is present.

The monopoly market structure provides evidence for the possible inefficiency that may be incurred through the price mechanism system. This is a consequence of monopolies being able to set their prices, and looking to profit maximise at the point where MC=MR as seen below:

P2The scenario above takes the market away from away from allocative efficiency, and incurs a deadweight loss. This is a result of there being social welfare, which is not taken by the consumer or producer (shown below).

P3

This prices out a range of consumers, so the deadweight loss represents transactions that could have occurred and would have been socially beneficial, but have not occurred. This point is not Pareto optimal as the consumer is worse-off, nor is it allocatively efficient. Allocative efficiency and Pareto optimality could be achieved if the monopoly were to go to the equilibrium of Qe-Pe, this would mean the firm prices at the point where MC=AR, returning to market clearing.

It is important to note that a monopoly may achieve dynamic efficiency, which is unlikely for a perfectly competitive firm as a consequence of having normal profit. The monopoly gains abnormal profit (as shown by the profit margin in graph 2) that can be used for research and development. Taking the example of pharmaceutical companies, it can be noted that this abnormal profit is required for new drugs to be developed, otherwise at the cost of innovation perfectly competitive firms would not be able to supply new or better drugs which may benefit society.

We must also consider inefficiency incurred through firms pursuing aggressive tactics such as using the abnormal profit to set up legal barriers, attempt to takeover smaller firms, and abuse the economics of scale to lower the price in order to stop firms entering the market. This generates greater inefficiency in terms of reducing consumer’s welfare while also ensuring future inefficiency as barriers to entry. An example of this behaviour was shown by the De Beers diamond cartel in the 1980s, where it had a market share of up to 90% (Zimnisky, Paul). This was achieved through persuading independent mines to join the cartel; if they chose not to they would flood the market with diamonds reducing their price thereby pricing them out. They also dictated price through stockpiling in order to limit supply (Zimnisky, Paul). Exemplifying firm behaviour through the price mechanism that yields inefficiency in terms of societies welfare.

The price mechanism may also fail to provide efficiency as a consequence of externalities, which are an effect on a third-party that was not involved in the original transaction that is not accounted for in the price. The degree of inefficiency tends to correlate with the typology of the good in question. The manner in which the market forces operate suggests that the price mechanism is still operating efficiently due to the market clearing, as the externality is not directly shown. We must also consider that there can also be a deadweight loss in this scenario. The externality as an inefficiency may be shown through considering marginal private cost and marginal social cost, in that the market equilibrium is at the price and quantity that corresponds with marginal private cost, not accounting for the social cost:

P4

However, this can be countered by the efficiency stated through the Coase theorem. Suggesting that if bargaining in regards to an externality can occur, then an efficient outcome will be reached, providing there are negligible transaction costs. This scenario is shown below:

P5

In this the net social gain is a result of bargaining in regards to the externality between the two parties, which results in net social gain. This is due to the loss of profit, take for the conventional example used of wind turbines and noise. The turbine company is willing to compensate people suffering from the noise due to the greater gain of using the wind turbines. There is also the opportunity to be Pareto optimal at Q1. However, this theory is limited by assuming the negligible transaction costs, which in reality tends to not be the case.

Consequently, we may examine methods of dealing with externalities, such as taxation and compensation. The case of tax effectively raises the cost of the good or service in order to account for the cost of the externality. Depending on the elasticity of demand we may note a change in the quantity consumed, regardless of that the price is “corrected”. Shown below:

P6

Here the red highlighted area represents the active externality. With the size of the tax shown through the shifting upwards of price. Now at Q1 we operate at a Pareto optimal point, while the cost is at C2, when originally at the cost of C2 there would have been Q2 consumed. When we consider compensation, the total compensation paid is up to the point where cost first meets marginal social cost. With the Pareto optimal quantity at Q1, this makes up for the cost that is unaccounted for in the original transaction, as shown below:

P7

Even though these are theoretically capable of dealing with an externality in order to yield an efficient outcome, we must consider that the government carries them out. Therefore, there is government inefficiency that may be carried through the initial inefficiency of the price mechanism, this is due to the inability to determine the degree of compensation or tax that is required to bring price to the point of market clearing.

Take for example the externality present with industrial fishing. While fishing occurs we may assume that the amount of fishing occurring is so that there is supply to meet demand in order for the market to clear at equilibrium. However, this does not account for the negative effect on fish stocks. Due to the demand for fish exceeding the reproductive rate of fish there is a strain on fish stock. Furthermore, the methods by which fishing occurs such as trawling may adversely affect other sea life. Quotas can prove inefficient in dealing with this problem due to the lack of infrastructure related to dealing with each fishing boat and the policing required. Moreover, this can lead to fisherman using the same methods then stock dumping which also carries negative effects towards the health of sea life. We would not consider tax, as it is not in the government’s interest to raise the cost of living for the population, this leaves compensation. This may be towards subsidising fish farms, reducing the burden on natural fish stocks. Additionally, it could go towards subsiding the fisherman to the decrease in revenue if they were to fish by less efficient but more environmentally friendly means.

In conclusion, we may note that the price mechanism can at times be relied upon for providing efficiency. However, it may fail when we consider market structures such as monopolies, or the case of externalities where there are inefficiencies that are unaccounted for in the market equilibrium. To refine this analysis of price mechanism efficiency we would consider the typology of the goods in services in question such as merit and normal goods, or common access resources.

Almog Adir


 

Bibliography

Zimnisky, Paul. “A Diamond Market No Longer Controlled By De Beers.” Kitco Commentary. 06 June 2013. Web. 02 Nov. 2014.

Copyright Almog Adir © 2014 · All Rights Reserved · My Website

The Patent Dilemma

In simple terms patent law is frustrating. There is a strong rational argument for keeping patents and abolishing them. Those who innovate deserve some kind of compensation for their efforts, however even temporary monopoly leads to inefficiency and does not best benefit society. In the following I will consider the arguments for and against patents.

There are four central arguments that were used to justify the patent system of the 19th century. Taken from the book “The Patent System and Inventive Activity” by H.I. Dutton.

The Natural-Law Thesis

This thesis is based on the assumption that individuals have a natural right to property of their own ideas. Using others ideas was tantamount to theft as it was private property. Even supporters of the patent system would not go far to advance this argument. William Hindmarch noted that an inventor couldn’t have any natural right to prevent another person from making or using a similar invention summarises the breakdown of this thesis, on the basis that being loosely defined no boundaries are set as to what is a unique and individual idea.

Reward by Monopoly Thesis

The base argument of this thesis is that inventors should be rewarded according to the usefulness of their invention, since market forces may not always guarantee it. Adam Smith and John Stuart Mill were patrons of this argument as he noted the importance of the rule of law, and the institutional framework, which corrected market failure.

This is beneficial because allowing inventors monopoly ensured a period where they would gain sufficient return for the effort, without this protection competitors could in theory lower their costs at no cost. Introducing the free riding problem to the benefit of others inventions. In any case there was the argument they were harmless, market forces would determine the profitability from the invention, if it were a useless invention then there would be no reward.

Jeremy Bentham also distinguished between two categories of labor. In that there was the physical variety whereby it could be imitated with similar reward. Then the skilled variety where progress would reduce cost of production, rather than simply add to production.

Monopoly Profit Thesis

Private rewards was a clear incentive to invent, it differs from the rewards argument as it concerns itself with the duration and exclusiveness of the monopoly. Noting that it is economic growth for society that is ultimately desired. So in this sense growth and private profit would go hand in hand. There is evidence for this link in that many claimed that patents were integral to the creation of the most valuable inventions.

There was also the aspect of the speed at which innovation was carried out when patents were under use, this applied to foreigners and domestic inventors as the patent system enabled both equally to pursue invention, while securing the industrial basis of the economy.

Exchange-for-Secrets Thesis

This was based on the 18th century idea of contract, whereby a bargain occurred as one received protection and the other received knowledge. This thesis emphasised the importance of disclosure. This theory was not concerned with output but rather the dissemination of information of the existing technologies.

This had led to the more complex nature of patents, requiring full disclosure of the technology or inventions in a specification, in order for law officers to make provisions for the patent, established in 1734, and emphasised in 1778. Simply put by John Farey patent is the price of disclosure.

Anti-Patent

The greatest fear about patents was the manner in which monopoly was pursued, noting the particular evils associated with monopoly to ward off the use of patents. The counter-argument was rather that patents had brought what was private discovery into the common, and that just because the monopoly existed did not mean that market would demand it, or that an artificial price increase could be maintained. There was also the notion by William Spence that monopoly prompted a specific type of competition.

The main ideology behind the anti-patent movement was on the basis of free trade and the emancipation of industry. This had gained better grounding after the Corn Laws were repealed and the navigation acts took place.

  • Dangers of monopoly, negative effects on workers, manufacturers, etc.
  • No longer necessary due to a mature economy, firms able to compete normally without special privileges
  • The Economist argued it was immoral and economically unsound
  • The lottery nature of patents, whoever got the idea first by chance
  • The inefficiency of how patents were administered, and the lack of protection they actually offered is the main factor that put off inventors.

Against Intellectual Property – Boldrin & Levine

The example of James Watt’s new engine shows the limitations of patents, after initially having to spend six months obtaining a patent, he then spent time combating off rival inventors, to which the patent was then extended. Then after a period of commercial production his advanced engine had only sold 449 units of the 2250 steam engines around. A patent also limited him with the technology he required being the property of James Pickard.

This situation effectively describes Watt as not only an inventor but able to exploit the legal system, noting that his partner had strong connections in parliament. The legal system was used to limit competition, with evidence of limited adoption of steam engine innovation due to Watts’s monopoly. It is also worth noting that Watt spent more time on legal matters rather than inventing. This is summarised as rent seeking behaviour; this is shown through the patent extension that was not needed but favourable for Watt. In the conventional monopoly manner high prices prevented others from entering the market.

Most often attributed to the patent system are the evils of monopoly, corrupt rent seeking, legal suppression of innovation, reduced economic growth, and the los of personal freedom. It is argued that innovation would thrive in the absence of intellectual monopoly. This is brought up next to the concept of free trade and what used to be extreme protectionism. With the authors arguing that today there is the violation of intellectual property laws in that consumers desire cheap books, music, etc. in convenient format and are willing to violate law for it.

The legal framework is as follows in levels of protection of intellectual property: Patents, Copyrights, and Trademarks. Copyright tends to the specific, whereas patents provide broad protection over a general idea. The Right of Sale is a fair concept in that inventors should be able to profit from their work, the right to control however results in prosecution carried out by government.

Intellectual monopoly may be denoted as the right of the owner of the intellectual property to dictate how the purchaser uses the idea and or limiting them. Concept of first mover advantage, should still command a fair premium on the market? Economists favour competition over monopoly on the basis of freedom of contract and well-defined property rights. Shrink-wrap agreements are effectively enforcing collusive contracts. Their argument suggests that the right of sale should be present but then whoever completes a legal purchase and owns a copy now has the right to use the technology however they would like to. The law inhibits the potential of creativity. Similar analogy created between intellectual property and trade restrictions, looking at the transmission of goods being superior under free trade. The reward for invention argument is limited.

Milton Friedman notes the dangers of occupational licensure, but makes a notable point in that there seems to be support for such laws, as the producer group will always be more concentrated then the consumer group (Capitalism and Freedom, Page 143).


The outline of these arguments shows that there is validity in either approach, making the next requirement a look at examples. But rather than making a solution clearer, it goes on to complicate it further.

Take one of the most popular examples: pharmaceutical companies. We understand that there are high costs associated with the research and development of new drugs, therefore firms would like to be compensated for their effort and innovation. However, this tends to price drugs at a level unaffordable for the vast majority of society. Then on the consumer side this means the lack of consumption of a merit good. In the United Kingdom the National Health Service subsidises the cost of drugs in order to ensure and encourage consumption, such as free drugs for those in full time education. Nevertheless, this is limited as the NHS must choose which drugs to subsidise, and what degree to subsidise them. Firms may aggressively price increasing the burden on the NHS, this is often the case with brand new drugs.

Now if we consider paracetamol, the moment the patent ended the market was flooded with new brands all delivering the same product. Now a consumer can get paracetamol of 500mg pills from Sainsbury’s at £0.55, this effectively allows it to be consumed by anyone. The low price a consequence of extreme competition, and economies of scale resulting in mass production.

If we take the idea of altruism and greatest social benefit, we would look to reduce the comprehensiveness of patents. This brings forward the question of how much innovation should be rewarded it terms of length of patent, we leave the market forces to decide how well the innovator fares, but regardless it may stop others from innovating, lead to legal disputes, and tends towards what we see as the “evils of monopoly”. I personally believe that the anti-patent argument tends to over emphasise first-mover advantage, as in a world where communication occurs at increasingly higher speeds, information can be spread quicker then a firm may act.

Copyright Almog Adir © 2014 · All Rights Reserved · My Website

The “Inevitability” of Planning

Hayek

There was an argument for the inevitability of planning for example technological change bringing about the existence of natural monopolies, consequently requiring government planning as to some extent the lesser evil than production by private monopolies.

Hayek breaks down this argument once more by considering social infrastructure and existing policies. He asks the question whether the development of natural monopolies is a consequence of new technology, or more simply the economic conditions in which they operate. Hayek argues that the latter is true. He uses the breakdown of the following example:

A large firm having superiority over a small firm, due to technological change may result in greater economies of scale, and an as such lower cost per unit produced and thus begins a process of underbidding and driving out small firms in order to increase market share.

Now at first glance the argument stated above is reasonable, but Hayek notes how this is not the case from a congressional report by the temporary national economic committee in that it states:

“The superior efficiency of large establishments has not been demonstrated; the advantages that are supposed to destroy competition have failed to manifest themselves in many fields. Nor do the economies of size, where they exist, invariably necessitate monopoly.”

This leads Hayek on to argue that it was the policies within countries which facilitated the growth of monopolies, which would then drive out smaller firms. He takes the creation of cartels, and syndications as a consequence of governments seeking regulation in prices and sales as the factor that led to the growth of large monopolies. This goes back to his overarching argument of travelling down one road completely or not at all, as there is greater flaw in attempting a mixture. Then going on to state that “monopoly capitalism” became acceptable even more so as countries such as the United States erected protectionist policies and pursued semi-isolation. He uses the example of Great Britain in stating that planning is not inevitable, in that yet again policy had promoted the growth of natural monopolies. He notes that the British system had been extremely competitive up until 1931 where similar to America protectionist policies arose, and economic planning was introduced and thus monopolies came about. Not of technological change, but the actual structure of the economic system.

He then delves into another segment where planning is not inevitable. Arguing against those who make the assertion that the complexity of modern industrial civilisation creates the need for central planning otherwise we cannot combat its problems effectively. They additionally state that it is increasingly difficult to obtain a coherent picture of economic process, thus things should be coordinated or else dissolve into chaos.

Hayek breaks this down by simply stating that if conditions were simple enough for one person or board to have perfect information then planning works, but as they note in their own argument there is this existing complexity where it is increasingly difficult to attain this information. Thus Hayek argues that decentralisation becomes imperative, as then there is the coordination between separate agencies to bring about “mutual adjustment”. Furthermore, he states that “nobody can consciously balance all the considerations bearing on the decisions of so many individuals.” Thus he arrives at the price system and how it operates without the need for recording every single change in information by a central body. It also allows for the greater complexity in our system which helps the growth of the industrial system and that planning ultimately stifles it.

It is here that he comes to point which is of particular interest to me, he writes about how technological change can be stifled in order to maintain the status quo. For example the industrial revolution promised to enhance the productivity of labour; however it came at the cost of employment for many people. So here arises the argument for the need of central planning to efficiently create the change over such that the short term loss does not override the short term gain. To this Hayek states that planning is not needed as either the short term loss can be accepted, or the change can be delayed up until the necessary infrastructure or policy is erected to minimise any loss.

Specialisation & the Allure of Planning

Hayek states there are many good things, which all agree are highly desirable, and possible, that are difficult to achieve within our own lifetime. This develops the allure of planning in that it seems possible to circumvent the barrier that is time, collective action leading to the achievement of these goals.

He then brings this into regards of specialists (technocrats) in that a planned society seems to offer a route to achieving their objectives. He states that this is an illusion and a misdirection of resources, in that the specialist will obviously place greater importance on his aims then others. Hayek uses a nice example to illustrate this:

“The lover of the country-side who wants above all that its traditional appearance should be preserved and that the blots already made by industry on its fair face should be removed, no less than the health enthusiast who wants all the picturesque but insanitary old cottages clear away, or the motorist who wishes the country cut up by big motor roads, the efficiency fanatic who desires the maximum of specialisation and mechanisation no less than the idealist who for the development of personality wants to preserve as many independent craftsmen as possible.”

However, they all have a wish to go about this planning and therefore they will ultimately come into conflict with each other. As such this brings about the central issue, that not everyone can be pleased. It’s attractive to those who have devoted their lives to a single task and want to see it done universally. But practically this cannot occur, also defining to some extent the authoritarian nature of central planning, only one direction can be pursued and thus not everyone will be pleased.