The ideal form of government for Laozi is an invisible one. In chapter seventeen, Laozi states, "The greatest of rulers is but a shadowy presence". This does not mean Laozi thinks anarchy is the way to go but the action of wuiwei (nonaction) is. This idea of a simple form of government coincides with the idea of a simple life. Laozi believes only through such practices as stripping oneself from all excess desires and abandoning knowledge can one live a long lasting life.
The town that people under Laozi's ideal government lives in, is peaceful and quite (Laozi, 31), but not uninviting. Even though the citizens can hear their neighbors, they do not visit them (Laozi, 80). There is no army, as the military and use of violence are strongly looked down upon (Laozi, 30, 31). Chapter fifty-five is a passage that embodies Laozi's idea of an ideal citizen. It suggests that citizens should strip themselves of all unnatural desires to the point where they are like newborn children. Newborn children eat when they are hungry and sleep when they are tired. They only act upon their natural-born instincts. Their minds are not clouded with socially instilled desires because they are "perfectly pure" (Laozi, 55). Therefore, people who live under Laozi's ideal government are simplistic and act upon their natural, spontaneous human impulses. .
Furthermore, the citizens are illiterate (Laozi, 80) and unknowledgeable (Laozi, 20, 57, 65). Being unknowledgeable, they do not judge others or hold themselves superior to their neighbors because they do not make distinctions (Laozi, 1, 32). No "names" results in no robbers or thieves within the society because without names, objects are not valuable anymore. The citizens do not strive or pretend to be benevolent (Laozi, 38). Instead, they are naturally kind and considerate because that is a spontaneous human instinct (Laozi, 19). With all distinctions stripped, everyone is equal.