It is debatable whether it is cruel. It is an unnecessary surgery that involves the equivalent of cutting off fingers at the first knuckle. There is a recovery period that is not pleasant for the cat most likely. There are potential complications.
In that regard, I'd say it's slightly cruel since it is an unnecessary surgery for the convenience of the owner. It'd be like forcing your cat to get liposuction or lasik surgery.
I have one cat with claws and one cat without. Both arrived that way from the humane society. There is a very noticeable difference between the two.
I don't know whether I buy into the long term psychological effects BS, but my cat with claws is much more adept at playing with all cat toys and doing general cat activities. My other cat tends to stay low to the ground and rarely tries to climb up cat trees, which are much more difficult for her to climb since she can't dig in with the front claws and pull herself up like the other cat.
She can't do the full range of cat playing things, such as swiping a toy with a tail and thereby hooking it. Her method is kind of sad, she just stomps it and tries to pull it toward her, and gives up. When I had carpet, it was really hard to find a toy that interested her for long. With hardwood floors it is better since the toys naturally fly all over the place when batted.
She also tends to be victimized by the cat with claws because she can't really defend herself that well with just rear claws.
Also, when I pick her up, she digs her rear claws into my chest and in general gets very stressed out when she doesn't have her rear feet planted because she can't get stabilized on anything with just her front paws.
So, cruel? I don't know... but it has a negative impact on the cat, or at least my cat. And it is rare that a cat cannot adapt to human rules about what to claw and not claw. Scratching posts and catnip pretty much take care of all of it.
I wouldn't get the cat declawed.