Makes sense. If you
feel you can't trust the people under you because you can't identify the problem people fast enough, then your best choice is to micromanage instead.
"Feel" is the key word here; this line of thinking can be less about the reality, and more about manager's own insecurities. This makes paranoia an even more powerful force amplifier for sabotage. If a tiny act of sabotage makes managers paranoid enough that they resort to corporate dictatorship, the productivity will tank. Which will probably not help with lowering the paranoia. At extreme ends, I imagine paranoid people get routinely triggered by normal variance in systems they oversee, making the whole thing self-perpetuating.