How do you deal with rude people without stooping to rudeness youself?

I have a relative who seems to think that bluntness and rudeness are a good way to speak to people. He was once told that it was nice to be told the truth without him worrying about the persons feelings. Since being told that he is rather ruthless to people and drives a lot of people away. I have to be around him alot and he us not that way with me, but it is unbearble to listen to him talk to others that way. He also thinks that people only call him for favors, and not to talk, which could be true to a point. He puts people down for almost everything they do, say, buy, build, drive, say, or think. I feel bad for him because he is alienating people, and always has to tell people how HE would have done whatever they did better or in a better way, etc. How would you deal with this? His wife is a bit heavier now than when they got married, and he harrasses her so so badly and so rudely that I can hardly stand it. She takes it, which I think is awefull on her part, but what can I do? Your help is much appreciated.