cooperation and punishment

I have long believed that punishing children does not lead to cooperative family environments and recently got a little more confirmation of this than I would've liked, quite frankly.  There is a family that we have contact with about once a year.  We've had very different parenting styles from the get go but now that the kids are all between 8 and 10 years old the difference are showing up more than ever.  As toddlers the parents always excused the kids' behavior based on age, but now that they are all in the middle years those same excuses don't really fly.  No one is a toddler anymore.  The main thing that stood out for me was the other girls lack of compassion.  Whenever they hurt someone else their first response was, "Are you going to tell on me?"  They were relatively unconcerned with the person that they hurt.  There were no signs of visible remorse or regret- only fear that they would be getting in trouble.  And equally disturbing was their seeming pleasure with trying to get the others 'into trouble.'  "Into trouble" in their house means: spankings, time-outs and getting TV and video games taken away from them.  We do not have "getting in trouble" in our house, nor TV or video games for that matter.  We simply talk about things, or hug each other and resolve the situation at hand.  If one of my girls hurts the other they usually both come to me to ask what it needs- ice, arnica, a band-aid?

But there is not shouting and screaming, "She did ____ to me!" as was the situation in our house all of last week.

Now, I think all of the far reaching, long-term detriment to raising children in a punishment driven model are quite obvious so there's no need to even write it.  This has been so well researched and documented over the past 40 years in particular, it is absolutely SHOCKING to me than anyone still does this to their kids.  But they do.  And most of the people in this family's church are still encouraged by the pastor to do the same.  And all in the name of God and Christianity.  I know I'm too close to the situation right now to have anything constructive to say on the topic.  All I can say right now is that it turns my stomach and makes me mad.  I know it should be none of my business how other people raise their kids, but ultimately we all share one world, right?  One world that could be brought together where people care about each other and work together.  I guess right now I'm just soooo confused how the teachings of Jesus could be used as a justification for filling children with hatred at such a young age.  These girls said, "I hate you." so often to each other and anyone else around whenever their parents weren't watching.  They derive pleasure out of causing pain to each other and others and haven't a clue what it means to work together cooperatively.  So the parents punish them even more believing that they have been given a 'difficult one' because God knew they could handle it.  What a crock of @#$!!  Not exactly an uplifting post, I know.  But sometimes I just wonder how we ever got this far removed from anything that could possibly make sense.