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Recently a subreddit I follow was banned for being unmoderated. This seems counter productive.

I would think that the process would be a bit less draconian:

A: For a month, keep a sticky post, "The subreddit needs moderators -- and spell out what the moderator needs to do.

B: At that point the subreddit is locked -- no new posts or comments, but the call for moderators is still present. It remains in this state indefinitely

C: If there is a problem with content, then the intitial notice says something like, "This subreddit is not following Reddit's policy #27 (link) Content will not be visible until we have moderators, and the moderators have a removed offending content and have a rules policty that makes the sub compliant with rule #27.

In this state, no other content besides this is visible, but the sub reddit still exists.