I'm unable to spot the name calling you're referring to. The comment is on topic indisputably, and no reductionism is visible to me. You're being unjust to the commented. He's not uncivil at all too. It seems to me that you're failing here as a moderator in fostering discussion with diverse viewpoints.
The comment makes two reductionist moves: it casually substitutes one thing for another as if the two were the same, in order to tar one with derision proper to the other; and it uses the modifier "merely" followed by something trivial in order to demean the subject. I don't know what you call reductionism, but to me that word is not only justified, the comment is a poster child of it.
That comment is making a deduction given the details of the business, and includes the commenters thoughts about it's future. WRT merely, when saying "they are merely adding a middle-man to probation", that's not reductionism if they're indeed "merely adding a middle-man to probation". WRT your citation of the guidelines, this interpretation might indeed be the strongest plausible interpretation of this business model that the founders have been explaining.
If I wrote yet another minimal lisp implementation in a weekend, and marketed it as if it was going to best Chez Scheme in all benchmarks, and someone came along and told "yeah but this is just a reiteration of sth. we already had, nothing new here, and your ways seem a bit shady", would we have to discount it as reductionism?
You might disagree what people think, but you should not think and decide instead of them. I appreciate the work you do as a moderator of this fabulous community, but in this case you're openly siding with one side of the discourse. Either do not do that, or add to the guidelines that "HN moderation will vouch for what HN companies are doing, disagreements on their busines models are unwelcome". And also, while at it, I can not vouch for the comment I'm talking about, and I would rather.
I post these things all the time. It isn't taking sides, except insofar as a moderator has no option but to make calls about things. Nor does it matter whose work it is or who owns the company: I say the same things in any context, as anyone with the stamina to slog through my comment history can see.
I guess furthering this thread is of no use so I will conclude my participation with a sincere invitation to reflect upon and reconsider your point on this particular situation. I understand your motives, but believe you've made a wrong call this time.
Many of the severest problems in the criminal justice system are those encouraged by perverse incentives in the legal system and the laws themselves. If someone is seriously interested in justice reform, the last thing they should do is introduce layers of profit motive and competitive business strategy to their reform project. Personally, I'd use stronger terms than garbage to describe the issues inherent in bringing private industry into this area of society.