This is a decent response, but I could counter, and have countered, a lot of the arguments Krugman layed out in his blog. The article I linked has many in-depth real life stories from the lives of people living in Dubai. It's hard to counter and I don't buy your claims that these "issues" in Dubai are in the "minority". To me the place is nothing but fake everything.
Keep in mind that I appreciate very few cultures in the world today. Everything has gone to shit, we live in a shallow materialistic craphole where all that people care about is fame, money and entertainment. Most values that I consider decent or even sane are struggling to survive.
Relative poverty is growing fast which is destabilizing societies and creating even deeper classism. At the same time we're screwing the natural environment that our lives depend on. Based on that article it seems that people in Dubai are even more illusional than the people in the Western world.
So you're saying that humanity is worse off today than it was in the past?
Anyway, I think Dubai is shit, but the reason for this is that it's based on retarded, backwards, muslim laws and regulations where you can't go bankrupt and also a culture of corruption and racism where companies are allowed and encouraged to discriminate based on race and nationality (I guess I just did that myself). I know many oil-sheikh-kids from UAE and I understand their culture, and basically it's shit and I'm not surprised Dubai is turning it to be a huge "selling sand in a desert" scam.
A charter city would, because of the guarantor/host/source model have different rules and a different culture than the country in which it is created. In the Charter City it won't be the nephews of greedy oil sheikhs that will be in charge of persecuting corruption, it will be Norwegian or Canadian officials.