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Iacocca has become an advocate of Government intervention in the marketplace. "I'm not very popular with the people around the White House anymore. I told them (on trade policy), 'Let's make sure we don't get hosed.' They don't like that. This Administration sees you either as a protectionist or a free-trader, with no shades in between. And we're going to lose, as a country, for it." Given the protectionism and market intervention practiced by Japan and other foreign governments, Iacocca would have Washington intervene in the market too, setting up import tariffs and quotas to keep manufacturing jobs in the U.S. In his view, the U.S. "is being played for suckers" by sticking to principles of free trade while other industrial nations subsidize their exports and limit imports. The U.S. trade gap, $123 billion in 1984 and growing, is to Iacocca the most urgent danger facing the country. "I don't care what the cause of it is, I know the end result. I don't give a shit whether it's the strong dollar or what it is. At $123 billion we become a debtor nation of the worst order." More and more U.S. manufacturers, he fears, will build their factories abroad unless, for example, they are forced by domestic-content legislation to keep production Stateside. "And once they're invested," he says, "you can't pull them back. In the (capital) investment world, once you've done it, you've done it! A guy buys a Toyota, you can get him back three years from now. But you can't bring an auto plant back home. As the months or years go on, we are deindustrializing the country."
But tough talk does not necessarily make good economic policy. The Administration and some Democrats argue that protectionist barriers cost more to maintain than they are worth. By the estimate of the U.S. International Trade Commission, the voluntary import restraints on Japanese autos that were recently lifted cost U.S. consumers $89,250 a year in higher car prices for each U.S. autoworker's job saved. Furthermore, free-traders argue, a protectionist cocoon would discourage manufacturers from reaching for greater operating efficiencies.
The Administration's tax-simplification plan angers Iacocca: he shouts about the provision that would abolish the tax preferences enjoyed by industry--like automobiles. "I don't see any broke-ass McDonald's out there. I don't see anybody (in services) shutting down jobs so fast you're throwing them on the dole."
Most notable, perhaps, is Iacocca's enthusiasm for "industrial policy." The idea, essentially, is for Government to engage in active economic planning: a thoroughgoing, centrally coordinated set of federal policies intended to encourage certain industries. Such planning, he writes in Iacocca, "doesn't have to mean socialism." No, but critics do not share his bouncy faith in the ability of Government to fine-tune market forces. It may be that the U.S. economy is too big and complex for such meticulous economic tinkering. Curiously, he cites the past half-century of tangled agricultural- subsidy policies as a model for a future industrial policy.