The chapter opens with a warning to a government about the limits of intimidation. When the people do not fear what is worth fearing, then the great thing to be feared arrives.
The sentence turns on the same word used twice, and its force is that a population which has stopped being afraid of the ordinary penalties has not become docile; it has become the emergency. What a state has to fear is precisely the exhaustion of its own capacity to frighten.
The chapter then names the two causes, and both are material rather than moral. Do not narrow the places where they live. Do not press down on the way they make their living. Housing and livelihood, in that order, and the verb in each is one of constriction.
The reasoning that follows is worth stating carefully: it is only because they are not pressed down on that they do not tire of it. Not that they are grateful, and not that they consent. What is being described is the absence of the condition that makes a population stop caring what happens to it, which is the same threshold chapter seventy-four reaches when it asks how you can frighten with death people who are not afraid of death.
The chapter closes on the ruler rather than the ruled. The sage knows himself but does not display himself, cares for himself but does not exalt himself, and lets the one go in favour of the other. Self-knowledge and self-care are permitted; their public performance is what is set aside, which is chapter twenty-four applied to an office.