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Not exalting the gifted prevents quarreling. Not collecting treasures prevents stealing. Not seeing desirable things prevents confusion in the heart. The wise therefore rule by emptying hearts and stuffing bellies, by weakening ambitions and strengthening bones. If men lack knowledge and desire, then clever people will not try to interfere. If nothing is done, then all will be well.

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1 Sara Di Diego = "This connects to the verse in Chapter 2 "Therefore having and not having arise together".  Basically everything must be in balance to keep the mind in balance."
2 Sara Di Diego = "Here is a clearer version of Chapter 3:"When you praise worthy people, you make other people envious and quarrelsome.When you value rare things highly, you turn honest people into thieves.If you show people exciting things, you will make them covetous and greedy.The wise rule by keeping the peoples' hearts empty (of desire) and their bellies full.Making their bones strong and their ambitions weak.Since the people are free of avarice and desire,even the most cunning grifter has no opportunity to corrupt them.By using the "act without action" principle,everything just falls into place."Source:http://www.thetao.info/english/page3.htm"
3 Sara Di Diego = "If we don't exalt precious things then nobody will want to take them and we will not feel violated that something precious was taken."