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Largely because those that would find it of most use are looking to sidestep being flagged. eg: https://news.ycombinator.com/threads?id=Ranmalie

( You'll need Showdead: ON in user options to see most of those comments, they're flagged, dead, and spamming a dodgy cryto scheme )

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Yes, but it also hurts transparency, being treated fair and expose any foul play. I think full transparency, who flagged what and when, as a dataset, will be beneficial. HN became important source of truth, there is not many like it.

Or drop flagging as a feature completely. Looks easier :)

HN became important source of truth

Treating HN this way is a misunderstanding of its goals and would make HN much worse. 'nerd messageboard with less yelly conversation' is about as good as one can hope for the actual aspirational goal of 'place for curious conversation'.

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