The wise leader does not make a show of holiness or pass out grades for good performance. That would create a climate of success and failure.
Competition and jealousy follow.
Emphasizing material success is the same: those who have a lot become greedy, and those who have little become thieves.
When you reinforce appearances, people scramble to please.
The wise leader pays respectful attention to all behaviour.
Thus the group becomes open to more and more possibilities of behaviour. People learn a great deal when they are open to everything and not just figuring out what pleases the teacher.
The leader shows that style is no substitute for substance, that knowing certain facts is not more powerful than simple wisdom, that creating an impression is not more potent than acting from one's center.
The students learn that effective action arises out of silence and a clear sense of being. In this they find a source of peace.
They discover that the person who is down-to-earth can do what needs doing more effectively than the person who is merely busy.
Chapter 3 Tao Te-ching; John Heider (1985)