I would lose loyalty to someone who treats me the way this guy does.. I've had bosses that were hard on me, and that's to be expected.. I've had them be pricks, and as long as I'm treated fairly, I can deal with it... I'm there to make money, not friends.. If I'm not making money on top of crap like this, they can shove it.
This guy is a bloody arse, he's just nice enough to people they won't call him on it.. Good guys don't need to throw their weight around, and I've never seen a *good* manager use fear to motivate people.. Just like fear might train a dog, it doesn't make a loyal dog though.
At my last job I had just finished saving the company $250,000 on a machine that no one else could get to work, they were about to scrap the whole thing... I saved their bacon (in fact the customer wanted 5 more of them)... Anyhow, my yearly review was up, I was hoping for a $2 raise, and expecting $1 to bring me in line with the rest of the senior guys who knew their stuff... When they gave me $.50, I was livid, and did have other jobs lined up... I wrote a letter to the owner of the company, and said if a raise wasn't in it long term, a bonus would be acceptable. I got my $2 in the end!
Anyhow, this kerfuffle got a lot of other senior service techs upset, they saw that hard work wasn't getting rewarded. That summer 2 of them quit, each time one quit I got an extra buck for taking over their duties, then in the fall I pretty much spent all my time on the road (which comes with a buck premium).. I was traveling in round robin to 5 fritolay plants (New york, Georgia, Texas, California, and Colorado), and got another buck out of the blue that fall.
With a bit of squeaking early on.. just at the right time, I made it known I wasn't going to be a doormat.. I went from $14/hr to $20/hr in 8 months.. Even the $20 isn't that much for the kind of skill you need to have.. it's stuff that can't be taught, you just have to "get it" and have sense. Those kinds of people are hard to find, and the manager knew it, he figured he'd look good if wages were kept low, but he started looking pretty bad when he had no service techs available to do the work because of his shenanigans.