I supect that many companies run this way; operationally everything is running smoothly, but motivationally things are grinding to a halt. The people who do the work are so resentful of the people they work for that they cut little, imperceptible bits out of their effort--calling in sick some days, browsing the internet when they should be cold-calling, staying out a few extra minutes at lunchtime. And all will say the same thing to themselves to justify what they know is a half-assed effort: "I don't get paid enough to deal with this shit," which is a quantitative way of saying, "I don't feel valued here," or "I don't respect the shmoe in charge."
There is an old saying you get out of it what you put into it. But in any kind of social situation it is a two way street. And you only have limited resources of time, and energy.
As a manager you have to realize that people are not cogs, they learn and adapt, for better or worse and they take their cues from you, not the economy, not their spouse, not upper management, just you.
As an employee you have to realize that the boss has all kinds of stress too and often not enough information to make the decisions he wants to make easier. Give him that and things should go smoother for all of you.