Peter Hannaford, a longtime aide to Ronald Reagan, has died at 82. As the Washington Post puts it, after Reagan's term as governor ended in 1975, Hannaford "teamed with ex-Reagan aide Michael K. Deaver to handle radio broadcasts, newspaper columns and appearances that kept the presidential aspirant in the public eye" until his election as president in 1980. The Post obituary notes the last time Hannaford recalled sending Reagan an idea, in 1988 near the end of his presidency:

He had come across a saying attributed to a Chinese philosopher: “Govern a great country as you would cook a small fish.” Mr. Hannaford said he knew it would appeal to Reagan’s belief in applying only a light touch to free-market enterprise.

“I knew he would like it,” Mr. Hannaford said. “And sure enough, it was in the State of the Union speech.”

Indeed it was. The ancient Chinese philosopher was Lao-tzu (or Lao-tse, or Laozi). In The Libertarian Mind I write:

The first known libertarian may have been the Chinese philosopher Lao-tzu, who lived around the sixth century B.C. and is best known as the author of the Tao Te Ching. Lao-tzu advised, “Without law or compulsion, men would dwell in harmony.” 

And in The Libertarian Reader I include selections from the Tao. Not chapter 60, which Reagan quoted, but other sections with similar ideas:

19
Exterminate the sage [the ruler] and discard the wisdom [of rule],
And the people will benefit a hundredfold.

32
Without law or compulsion, men would dwell in harmony.

42
All things carry the yin and embrace the yang.
They achieve harmony through their interaction.

57
The more prohibitions there are,
The poorer the people will be.
The more laws are promulgated,
The more thieves and bandits there will be.
Therefore a sage has said:
So long as I “do nothing” the people will of themselves be
transformed.
So long as I love quietude, the people will of themselves go
straight.
So long as I act only by inactivity the people will of themselves
become prosperous.

75
The people starve because those above them eat too much tax-grain.
That is the only reason why they starve. The people are difficult to
keep in order because those above them interfere. That is the only
reason why they are so difficult to keep in order.

Professor Joseph Adler of Kenyon, an expert on Chinese religious traditions, wrote about Confucianism and Taoism:

The Tao Te Ching, or the Scripture of the Way and its Power, is one of the foundational texts of Chinese civilization – in particular of the religious and intellectual tradition of Taoism. Taoism is one of the two main streams of Chinese thought, along with Confucianism. They took shape at roughly the same time, from the 5th through 3rd centuries BCE, at a time when China was in a long period of civil war, aptly named the “Warring States” period.

Taoism and Confucianism both attempted to provide a new philosophical underpinning for government and society. Confucius’ theory was that a well-ordered and harmonious society could only be brought about when the ruling classes (the aristocracy and government officials) were composed of virtuous people. Their virtue, he said, would then spread throughout society like a wind rippling through a field of grain, mediated by able officials actively managing society through rational and benevolent means.

The Taoist approach focused not on society and conventional morality but on the individual’s relationship with the natural world. The Taoists had a laissez faire theory of government, although they too said that having a good ruler at the top was crucial. The difference was that for them, the ideal “sage-king” was one who did as little as possible to interfere with the people’s natural wants and needs. Their ideal form of action in the world, for both the ruler and the ordinary person, was called wu-wei, or “actingless action” – i.e. a form of natural action that reacts spontaneously to the flow of events and changing circumstances. The sage-ruler, they said, understands that governing a large kingdom is like “cooking a small fish.” How do you cook a small fish? As lightly as possible.