The chapter opens with a pair that inverts every expectation about administration. When government is dull the people are honest. When government is searching the people are wanting.
The words are chosen carefully. The first describes a government that is muddled, unhurried and not looking very closely, and the second one that is investigative, precise and thorough. Ordinary political sense says the second produces order. The chapter says it produces a population that is deficient, incomplete, always found short, because a searching administration finds what it looks for and creates the categories in which people fall below the mark.
That is the same argument chapter fifty-seven makes about published laws producing thieves, and the two chapters stand together as the book's case against administrative precision.
The middle of the chapter turns to the instability of every judgement. Calamity is what fortune leans on, and fortune is what calamity lies hidden in, and who knows where it ends? The line became proverbial in Chinese and is the ancestor of a family of sayings about reversal, and it is not offered as consolation. The following sentence makes that clear: there is nothing straight, the straight turns strange again and the good turns monstrous again, and people have been deluded about this for a very long time.
What the chapter does with that is unexpected. It does not conclude that judgement is impossible or that nothing should be done. It concludes with four things the sage is: square without cutting, sharp without piercing, straight without stretching, bright without dazzling.