Bullying can, for all effective purposes, be described as vampirism. People who bully traditionally do it to rob the victim, i.e the person that is being bullied, of their self-confidence. This in turn increases the bully's own self-confidence. It's a cheap way to make yourself feel important and self-secure, and nothing else.
The problem, however, is that it's a self-destructive way to gather self-confidence, as it doesn't help you build up your own self-confidence, and so doesn't make you self-secure per se. No, rather you steal the self-confidence of other people and thrive off of it. And that works fine... For a time. However, one day you will find yourself in an environment that doesn't allow bullying, and so you aren't able to fall back on your usual method of gathering self-confidence. And since you're used to simply being able to steal your way to self-confidence, you've never learned to build up any feeling of self-security that revolves around anything else than bullying.
This is what happens to most people who bullies their way to respect and self-confidence. Bullying is easy as long as you attend a lower school of some sort, but as soon as you're thrown into an environment where bullying is frowned upon and where you'll be scorned for doing it, you're helpless, and aren't able to build up any feeling of self-security. The typical reaction for most bullies in this situation is to adapt and find another way to build up self-confidence, but they never quite capture the gist of it. Tests show that people who bullied actively in their childhood have haunting self-confidence problems throughout the rest of their life.
In this way, bullying is just as destructive for the bully as it is for the victim, so it's a lose-lose situation.
However, the victims of bullies are often left with deep scars and sometimes even emotional trauma. Many victims of prolonged and unhindered bullying also have horrible problems with self-confidence, and many suffer other side effects as well. These side effects depend on what exactly the person was being bullied with.
Sometimes, however, the bullying will mend instead of break, and the victim will find a certain resolve that he or she hadn't known before. Reading some of the posts in this thread, I can see that that's the case with some people here, and I'm happy for it. You people deserve happy lives that weren't screwed up by an irresponsible bully. But that doesn't justify bullying: Bear in mind that the "mend instead of break" cases are quite rare. Most often the victims of bullying are scarred deeply because of it, and some never get over those scars.
So, bullying is equally destructive for both the victim and the bully. I think. Bear in mind that I'm no psychologist or anthropologist, but I am basing this on actual tests and factual knowledge. I could be wrong on a few things, though.
Bottomline: Bullying is bad with a capital B. It is incredibly destructive for both the victim and the bully (though it's most destructive for the victim).