I have heard Rabbi Paysach Krohn tell this story on a number of occasions. When his children were young he had a choice of sending them to one of two yeshivos, one where the mechanchim were clean shaven and the other where the rule was the mechanchim had to have a beard. He went to ask advice from Rav Pam who told him to send them to the yeshiva where the mechanchim were clean shaven since he himself shaved his children might look at him like he is a goy if he sent them to the other yeshva. And today all of Rabbi Krohn’s sons have beards! Notice that Rav Pam didn’t say because shaving is wrong.
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