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I see these plans, and I see disturbing parallels to the fictional setting of Night City in Cyberpunk. For those not aware:
Night City was founded as an attempt to bypass the inefficiencies its founder perceived in centralised government in the United States of the Cyberpunk world. Free of governance by the central US authority, and indeed independent of the two Californias it sat on the borders of, it was a hellscape of corporate governance with rampant homelessness, a ruthless economy, brutal crime, a police force that unapologetically serves the rich and powerful, and corporate armies that regularly shake down subjects of this so-called 'free city'.
Considering Grimes' particularly important role in the Cyberpunk 2077 video game, and of course Musk's appreciation for nerdy fiction, I think there's a 0% chance that Musk is unaware of Night City. Thus, the similarities to his idea of a free city to the fictional Night City can't possibly be coincidental -- he WANTS to make a world where he can sit at the top of his ivory tower while his goons rough up people like you and me in the dirty streets below. I don't want to live in that city, though.
It's not Musk being influenced by Cyberpunk nearly so much that Cyberpunk's development was influenced by Prospera, Seasteading, Balaji Srinivasen's “The Network State” and other "Startup City" anarcho-capitalist advocacy efforts.
The root of the appeal of the Free Enterprise Zone model originally embraced by Singapore, Hong Kong, Manilla, Monaco, and other micro-states is that you can consolidate the financial industry into a walled garden and then strictly control the lives of the inhabitants with a hyper-military police state.
Then the outlands are just impoverished wastes. Real political freedom, but no access to capital. Or real economic freedom, but no civil rights.
It isn't that you "don't want to live in the city", because you absolutely will want to live there when presented with the alternatives. You're presented with a false choice of proximity to wealth versus social autonomy.