Down-voting was intended to be part of the mechanism for correctly allocating the reward pool according to community consensus that forms during the process of curation. The main problem with down-votes were the weight of powerful accounts and the negative impact of down-voting on the psychology of the majority of Steemians.
So the down-vote was changed to a flag whilst many Steemians began discussions around the development of a culture of acceptable use. Generally, I think it's fair to say that most Steemians are in support of flags used to create a disincentive against abuse or plagiarism because without that, the cheats and abusers would run amok and destroy Steemit and Steem. The existence of the flag is therefore NOT the issue. The issue, like a firearm, is how this tool is used. There are several issues that arise from the way flags are presently used;
Rules governing the use of a flag - Well there aren't any rules other than those presently coded and at the moment you can flag whoever you like and the effects are determined by your Steem Power. (Given the psychology involved, even flags without power can cause enormous problem for the way Steemians feel about their fellows and about Steemit.) The 'rules' of flag use are open to interpretation and unfortunately, the consensus for reasonable use which the community has tried to implement goes straight out the window when there is a difference of opinion or it becomes expedient for some agenda or other. If you add in the voting power of a voting guild, a few dolphins or a whale and you have a great potential for misunderstanding and friction.
Concentrated power - It is entirely possible that many of Steemit's incredibly clever and complex mechanisms will only work properly at scale. They would certainly have a better chance of working if the power were more distributed and there were more accounts reading the material and curating. Each whale is interested in protecting her or his investment and they have different opinions on how best to do that. Reducing awards for certain content, increasing rewards for other content, undermining or supporting initiatives for one reason or another. All this behaviour is understandable but when the interests of the powerful become divergent, again their is the potential for great misunderstanding and friction.
Finite resource - The Steemit reward pool is finite and the environment is intentionally competitive with the intention of driving the production of quality posts. The reward pool must be finite....no-one wants hyperinflation. The rules that encourage competition also encourage innovation and enterprise that manifests in attempts to secure as large a feed from the reward pool as possible. There will be accounts that inevitably push the boundaries of what is broadly considered acceptable in order to secure such an income.
Imperfect reputation - With a perfect reputation indicator derived from known behaviour on the blockchain, supported by consensus of the majority of Steemians, it would be far easier for everyone to work out who to trust and what to believe. Reputation is affected by the down-vote which has broad subjective interpretation affecting it's application and Steem Power can be acquired and wielded without earning it. There is also the issue that it can take a long time for reputation to be impacted by unwanted or questionable behaviour.
There is a constant tension between the perceived costs and benefits of participation on Steemit and it doesn't help that everyone's expectations, influence, assessment of value and understanding of the system is different. However, the great thing about Steemit is that we have so much transparent information that we can analyze and such an adaptable consensus mechanism, we have the power to identify issues and address them. This is extraordinary and it just takes time and a bit of effort. Let's be clear about one thing, whatever the issues, Steemit has only gotten stronger for the testing, the community feedback and the development that has occurred since the Beta launch.
Solutions
How can we improve the flag, the SP distribution and the reputation measurement?
Flag - Let's describe the rules under which flagging is acceptable....what constitutes abuse? What constitutes plagiarism? Then ask everyone to observe the rules voluntarily. We could ask a creative Steemian to produce a badge which everyone who was prepared to observe these flagging rules could display within their account. The rules could also appear in the general steemit information pages with an explanation for why they exist. It might also be helpful to ensure that in order to deploy a flag, the reason for the flag must also be provided to help with further analysis. If an account is flagging with weak reasons, that fact alone would help to identify a rogue flag that the community might help nullify after discussion.
SP distribution - How about a curation reward sacrifice for one year? Ask all whales, minnows and dolphins to offer all their curation rewards to human or bot curators. Participant would also get a badge :) I think a lot could be done to accelerate Steem distribution by identifying beneficial behaviours and providing bonus rewards etc.
Reputation - Give reputation a greater number of characteristics so that an account can have a reputation for posting great fiction but no reputation for posting legal advice. Accounts could display their real world credentials and experience and we could have a plethora of additional badges.....witness, backup witness, steemit app developer. The only way I can think of that we can capture feedback about posts and general behaviour of accounts on Steemit is to enable a voluntary end -of-post-feedback addendum. Feedback could be another curation guild speciality.
Generally speaking, if we can truly remember that we are all beta testers and early adopters then the trials of the present may seem more reasonable and less personal.
This is a complex system and these are just my thoughts to help articulate some of the issues as I see them and hopefully some possible solutions. Please feel free to point out anything I've misunderstood.
Flag Meme Collection
Happy Steeming