It is an invalid argument to say you treat your children harshly to "prepare them for the real world". Childhood is not a holding pattern waiting for "real life" to begin. Your children are living in the real world now. Punishments and coercion don't teach them to toughen up in case some stranger down the road treats them thusly, it teaches them that punishment and coercion can be expected from the people who love them most.
Just because someone somewhere down the road will treat your child harshly is no reason to treat them harshly yourself. Instead, build them up. Show them how to peacefully interact so they will reject violence, so they will not accept coercion or mistreatment from others in their lives.