A lot of people see this as a system set up for bullies, but a lot of people also don't realize that in order for someone to flag you, they kind of have to sacrifice a bit of themselves as well. It is one less vote they can spend on themselves or someone else that they would rather support. So, the system lends itself to eventual settlement one way or the other.

Now, I have the unpopular opinion that the reputation system is in fact flawed in its current implementation, but that is also mostly a perception issue. As bernie has proven himself, you can still trend with negative rep.