Shalamar, one of my previous bosses was like this. When I arrived the "problem employee" was the receptionist. Granted, she was inappropriate and flaky most of the time, but she wasn't as horrible as he made her out to be. He was convinced that if we could just get rid of the receptionist, everything would be perfect. Well, she left and guess who became the "problem employee?" Me. (Never take a job where the boss tells you, "Just anticipate my needs." instead of giving you a written job description.) After I left, it was another coworker who was the problem. She left. Then was another coworker. He left and the boss was down to the "Golden Child" employee who was consistently late with his work or made last minute changes that cost the office money/time/trouble, but we were told to accommodate Golden Child without complaint because his job was "creative" and we had to understand his special sensibilities. Suddenly, with everybody else gone, Golden Child was horribly difficult to work with and was fired.
About a year after I quit, I ran into a member of the board that governed this office at a social event. Board member lamented the staff turnover and said she just didn't know how they managed to hire so many people who were incompatible with Boss's management style. Since I was self-employed and out of that industry, I had nothing to lose and said, "Have you thought maybe, since the common denominator is Boss, that Boss is the problem and not the employees?"
And I could tell by the look on her face, that no, she had not considered that. Boss is still working there. There are no employees left there that have worked there for more than six months.