What an enlightened ruler uses to guide and control his ministers consists of only two handles: punishment and reward. What are punishment and reward? Killing and penalizing mean punishment; praise and granting mean reward.
The way of a ruler values tranquility and reserve above all. Without handling affairs personally, he distinguishes clumsiness from skill in his ministers. Without planning personally, he foresees fortune and misfortune.
The Dao lies in being invisible, and its application lies in being unfathomable. Remain empty, tranquil and inactive, and observe subordinates faults in secret. See as if unseen, hear as if unheard, know as if unknown.