Losing a step on failed recovery?

[J6A]

So, for those who are on Facebook and are unaware, there is a specific group there for Panzer Grenadier, founded by Dave "More Customization Needed" Davieau.  If you're interested, let me or him know.  I don't know that I can admit people to the group, and I can pass it on to Dave.

Anyway, Dave is currently playing Modern (which has me wanting to play it now, too) and pointed out that the rules there say that if you fail to recover from demoralization, you lose a step.  I hand't realized that.  It seems pretty harsh.

Does anyone know the rationale for this rule?