This seems to be the physical manifestation of the the Wilhoit's Constant:

“Conservatism consists of exactly one proposition …There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”

It sounds like these proposed entire cities would protect, but not bind the residents, while those outside would not be protected from the results of the city, but certainly be bound against doing anything about it.