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While I was an administrator, I tried to combat this tendency. The result is well known. In that specific case, the moderators even had the support of another administrator, to the point they were untouchable. That is how bad it can get: not that newly promoted moderators have the characteristics you mentioned, but more-so that no one can do anything about it.
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Hiho, didn't want to go more offtopic but you woke my interest.
So if mods acts stupidly, noone of administration cares if the mod have a high positioned friend? (admin)
You said they were untouchable... but weren't you also an admin?