We are talking about people in the top 8% of the income bracket in US. Not a single engineer in Amazon that has or is getting PIPed is losing their livelihood. If you have Amazon on your resume, no matter what, you will have no issues finding another job, because the acceptance rate by itself to Amazon is <10% of all candidates, which acts as a very good filter and indicator for other companies that your more competent than a large percentage of work force there, so you automatically get a shot at an interview and likely a job offer if you are actually competent.
The biggest drawback of something like this is maybe having to wait an extra few months before buying that sweet BMW M3 that you wanted.
If anything, this kind of stuff should be viewed as games, because that's all this is. Supply/demand of labor mixed in with a few political and psychological things. The manager is not even close to being an asshole, he is just playing the game like all the employees are. Lets not pretend that the majority of people wanting to work at Amazon care enough about changing the world, they just want that MAANG salary.