Tyler Cowen argues in a TED talk (~15 min) that stories pervade our mental lives. He thinks they are a major source of cognitive biases and, on the margin, we should be more suspicious of them - especially simple stories. Here's an interesting quote about the meta-level:
What story do you take away from Tyler Cowen? ...Another possibility is you might tell a story of rebirth. You might say, "I used to think too much in terms of stories, but then I heard Tyler Cowen, and now I think less in terms of stories". ...You could also tell a story of deep tragedy. "This guy Tyler Cowen came and he told us not to think in terms of stories, but all he could do was tell us stories about how other people think too much in terms of stories."
Plenty of people have been tortured and not ended up with PTSD. Moreover, we classify instances of those things as harmful long before the DSM even lets us diagnose PTSD.
Also, there are approximately fifty arguments in that post and comments, none demonstrating that pain isn't intrinsically harmful so I really have no idea what you want me to take away from that link.
PTSD or other long-term psychological (or physical) impairment, then - which may be sub-clinical or considered normal. An example: Punishment causes a psychological change that reduces the person's ability to do the thing that they were punished for. We don't (to the best of my knowledge) have a name for that change, but it observably happens, and when it does, the punishment has caused harm. (It may also be helpful, for example if the punished action would have reduced the person's ability to function in other ways. The two aren't always mutually exclusiv... (read more)