I agree with the responses saying that teaching kids rules and basic respect is very important and don't have anything to add to that except gosh sometimes I get tired of reinforcing the same stuff over and over again. But I know that over time it has had results, plus what else are you going to do, give up and just let them have at each other??
But to the other point, I think that what could 'break a kid's spirit' is arbitrary and/or unexpected punishments. I had this a lot when I was growing up and it really distorted my view of the world as well as contributing to depression. When the rules are clear and enforced as promptly and fairly as possible, with reasonable consequences, I think it is ultimately a win/win for everyone. Would you really want to be around your own kid when they're all grown up if they keep resolving disagreements by brute force?
