It's more like a series of tradeoffs compared to other platforms when it comes to features and userbase tendencies, and none are perfect. Every platform sucks in some way.
Also, users (and user bots) do the flagging here, not moderators.
I don't know why you think moderators should work for free. That's up to the platform to decide.
Also, I'd take the lenience found on HN any day over the ban hammer / shadow ban / user siloing approaches that others sites cave to. As we've seen, there is no perfect approach.
Second, HN shadowbans all the time - they shadowban so much that regular bans do not even exist here. If they ban you, it will be a shadow ban.
As for shadow banning, yes it is employed here on occasion, but I'm speaking strictly from my own experience with the site. I regularly take large steaming shits on various capital interests in favor of the hacker ethos, and so far it has always been permitted (and is not hard to verify it isn't shadow banned). That this site is the child of SV monied interests says at least something positive about their tolerance for these things compared to other sites like X/reddit/bluesky who all have the groupthink/echo chamber concept polished quite well by now.
Another version is:
The optimal amount of fraud is non-zero.