This quote derives its strength from the idea that if people don't have access to some information, they are better off. That is, without the burden of some unnecessary information that will disturb the still waters of the pool, they will be at peace. Thus, it is decided to withhold information.
But withholding of information leads to a loss of power. The person who does not have access to this information has to take decisions without the knowledge of its existence, which has potential ramifications. It may result in an erroneous decision being taken, or the decider may regret taking the decision after coming to know of the existence of the withheld information.
In some situations, it is needed to withhold some information. This may be when the use of the information is unnecessary to the target subject, or when it simply creates an unnecessary burden on the receipient. For instance, citizenry need not be informed of every strategy of the intelligence agencies.
But, in other situations, timely dissipation of information is needed. Lack of dissemination may result in potential disasters. Lack of information also results in the grinding of the rumour mills.
On a more mundane scale, the necessity of secrecy must be avoided as much as possible. Sometimes it may be unavoidable, but it need not be that way always.
Is ignorance bliss? Not necessarily.
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