I think a program like this is just a way for parents who have raised their children poorly to pay up to $40,000 to feel better about themselves. I'm not saying that good parents can't have disrespectful children, but in a case so extreme that the parent feels the need to send their kids to a facility like this, it suggests that the child never recieved any meaningful guidance from his/her parents growing up.
Also, I wonder about the potentially negative long term effects of the program. They may be providing the youth with discipline and a grounding in important values (wisdom, respect, yada yada), but it sounds to me like they may be stripping away as much as they're teaching -- such as self respect and appreciation for one's individual qualities. They are becoming familiar with structure and respect for authority to such an extreme that it may be at the expense of curiosity and problem solving. Even in the military one is encouraged to be more -- we all know that "be all you can be" is the US Army's slogan -- not "be exactly what we want you to be."
1984, indeed.
If I screwed up so badly as a parent, I'd sooner send my child to military school than a conformity-conditioning facility, which is what this Tranquility Bay sounds like to me. [Of course its difficult to be certain with the unbalanced reporting in the article.]