Far more dangerous, in my view, is the dilution of authority and responsibility this engenders: if you are punished for every silly infraction, it diminishes the value of punishment generally, it you're going to get in trouble and be sent to the principal for calling little Johnny a "nerd" you might as wel punch his lights out.
It also means that as you are responsible for more, you take the responsibility less seriously: punishment and trips to the principal should be saved for serious misbehavior, with a real in terroram effect.
Very good point. And hey, stop call me a nerd! :)