Well of course no one is flagging bad stuff. You basically only lose doing that unless you know for certain that others do the same, only then you can all benefit from that.

As it stands now using your voting power to flag will leave you with less power to upvote, give you no chance to gain from the already sparse curation rewards and risk receiving flags in return. Unless you're the Steemcleaners or someone similar the chance to get recognition for your good intention is rather low and without others flagging trash and bad content you're for the most part just losing power that way, unless you're not voting much anyways.

What we'd need is a standardized way to reward people for justified flagging. If you report someone abusive to the Steemcleaners you get rewarded for that, it's actually a fairly decent way to contribute to the community while also getting fairly decent rewards for it. If the same could be said about normal flagging I'd assume a lot more people would do it. From what I can tell the Steemcleaners already have their hands full with work to do, so I can't really say everyone should just start reporting abuse to them from now on, as that would probably result in too many reports to handle all that well, but I might be wrong.

And about the bought upvotes, I really don't know what to think. I understand that there's a demand for bought promotion, however the risk you're talking about I'm not really seeing. I find it simply unfair, that it has basically become the norm to buy upvotes for money you're making back a week later due to the value of the upvote. Sure, everyone can do that, but the amount of mediocre or bad content which is listed way higher than actual good original content always makes me sad. I highly respect anyone who didn't bring a huge following and still managed to get attention here without the use of bought upvotes, because I think that's a really hard task actually. I'd go as far as saying I'd prefer people to use their own upvotes as promotion, because that would at least mean they had to buy enough Steem Power to have a noticeable stake in this system, which can help the currency a lot in the long run.