To start with, space is scarce. There is almost no room for new construction or ready-made houses. Most residents are renters, paying $20 to $100 a month for small apartments.If the $300 house is comparable to the $20 to $100 per month rental, even if you include the cost of a small plot of land it seems like a pretty good deal. And as for homewners, it's pretty easy to see how a $300 house could be conceived as a modular structure, subject to having additions. I'll grant, that's not a requirement of the contest, but it would be easy enough for somebody entering the contest to design a modular structure.
Those who own houses have far more equity in them than $300 — a typical home is worth at least $3,000. Many families have owned their houses for two or three generations, upgrading them as their incomes increase. With additions, these homes become what we call “tool houses,” acting as workshops, manufacturing units, warehouses and shops. They facilitate trade and production, and allow homeowners to improve their living standards over time.
None of this would be possible with a $300 house, which would have to be as standardized as possible to keep costs low. No number of add-ons would be able to match the flexibility of need-based construction.
Whatever the faults of a thought experiment such as this, that's all it is. The winner's idea is not going to replace all alternatives for the slum dwellers of the world, and even less so if it would not meet their needs. But the winning idea may provide a framework for providing even better value for the residents of "slum" housing - how to improve hygiene without breaking the bank, or how to implement solar heating or cooking and save money on fuel.
The authors also express concern that if, in fact, the contest results in the broad availability of cheap, attractive, quality housing, it will hurt the local construction industry. And yes, at that price point we probably would be talking about pre-fabricated housing, reducing the need for local workers and probably reducing the need for continued repair and maintenance. But... what in life is not a trade-off? Is it better that some people have to seek other lines of work, or that other people who would prefer the relative quality and sanitation offered by the winning design continue to live in less suitable housing in order to preserve that status quo?
The authors also appear to presuppose that the winning design would have to be implemented on a wholesale basis, rather than replacing individual housing units within the existing community:
The $300 house responds to our misconceptions more than to real needs. Of course problems do exist in urban India. Many people live without toilets or running water. Hot and unhealthy asbestos-cement sheets cover millions of roofs. Makeshift homes often flood during monsoons. But replacing individual, incrementally built houses with a ready-made solution would do more harm than good.Even if we assume that every entry in the contest would require the bulldozing of neighborhoods, and I doubt that such an assumption is well-grounded in the facts of the competition, the authors are free to make their competing proposal. For that matter, they can start their own contest with their own preconditions and price point, including that the proposals be for homes that, with appropriate assistance, local residents could build for themselves.