There is proof that this thesis is correct in document 2 of our DBQ. The document says that the ruler can avoid wrongdoing in the people and they will have no sense of honor and shame and set themselves right. If a ruler knows what is right and wrong and is a good person his people will follow him and do what he wants before asking them to do it.
According to Daoism, a ruler should govern with the right amount of laws, if they have too many or too little, the people are more likely to rebel against them and act out. There is proof that this thesis incorrect in document