“Here is the thing. Most of what managers amuse themselves with has very little to do with the actual business. Same with the military. Yes, you are here to work, but you are still human.”
My last job was with an ITT spin-off; a huge company. I had to sign a 10 page “ethics” statement. Part of it said that I agreed to never, ever under any circumstances tell a joke. I asked the HR lady why. She said, with eyes wide, “Oh, you never know who might overhear and take offense.” In essence, this “ethics” statement prohibited any private conversations and any use of the internet to look up, say, fishing tackle. You weren’t even supposed to do it on your break.
There were fewer personal interactions at this company than at any other place. Once, a guy told me a joke; the kind your preacher would tell. From his body language and paranoia you’d have thought we were conducting a drug deal.
Although this promoted the most professional environment I can ever recall, the morale was relatively low. People rarely spent any off-work time together. I think the entire operation was hurt by that. But I believe this is where we are all headed. Ask any younger person to tell you a joke and they can’t. Jokes have been beaten out of them by the school system because, “Oh, you have no idea who might overhear it and take offense!”
That environment that you described is a company that will fail. If everyone is afraid, you will not be productive. I have worked at places with the same level of fear and paranoia, and in the end the company either crashed or had the law shut them down (or both). Such environments are very toxic.
Of course I work in engineering. Engineers are the hardest to manage, and when we tell jokes 98% of the population don't understand it.