It's not really as easy as you make it sound. Incorrect moderation will cripple a site and prevent people from contributing, but moderation is necessary to prevent the site from declining in quality. Without moderation, a site's quality will decline with its increased size. The default subreddits on reddit are a good example of what will happen without sufficient moderation.
I agree but both SE and Wikipedia suffer from moderators being picked based on karma. Karma is achievable easily despite any motives and personality traits which are bad. They should be picked by humans as they are a better and more objective judge of who is fit to moderating a site to the site's standards.
While this is correct, I think his complaint is about the privileges that high-reputation users get. Most moderation is done by ordinary users, not by elected moderators.
