Playboy Interview: Lee Iacocca

There was a time in this country, believe it or not, when nobody had ever heard of Lee Iacocca. Hard to imagine today, when the name is as recognizable in American households as McDonald's, Frigidaire and MTV. Along with the original Henry Ford, he is the best-known figure in the history of American car building. From a scrappy car salesman toting flip charts up and down the Eastern Seaboard, Iacocca has risen to the number-one chair in the high-pressure chamber atop the Chrysler Corporation, along the way earning the status of national icon—a generic substitute for all that is right, or wrong, with the American automobile business.

But to millions of his countrymen, Lee Iacocca is simply the central character of an old-fashioned success story, a Fourth of July kind of guy who gives hard work a good name. His fairy-tale rise from the ashes of defeat—he was fired by the Ford Motor Company, for which he had developed the enormously popular Mustang, then saved Chrysler from bankruptcy—made him an almost mythic figure imbued with supposedly superhuman qualities.

By repaying Chrysler's 1.2-billion-dollar Government-guaranteed bailout loan "the old-fashioned way"—seven years early—Iacocca became, in the eyes of many Americans, a genuine, hero in a world notably lacking in leaders of stature. It was a role that in 1984 made him a widely touted favorite for the Presidency. Many voters believed that a man who could save a sick company while making it look simple could bring the same bromidic solutions to the baffling problems of modern life and a Government gone wrong.

Iacocca still flirts with a foray into political life ("I should start a third party just to shake things up"), but whether he's on the outside spitting in or simply raising hell on the international lecture circuit, he is a man of uncensored opinions who never shrinks from sharing them with the world.

Most recently, Iacocca has taken the lead in criticizing Japanese trade practices and calling for a fundamental rethinking of the American free-enterprise ethic, which he feels is dogmatically tied to old ideas of the Thirties. Japan has publicly winced at Iacocca's allegations, singling him out as the most glaring symbol of American mismanagement. The son of Italian immigrants, he is also a roving superpatriot who last September helped cut the ribbon on the Ellis Island Memorial—the gateway to America through which his parents passed more than half a century ago. The ceremony was an ironic honor: Iacocca had chaired the committee that raised $350,000,000 to polish the skirts of the Statue of Liberty and refurbish Ellis Island, but was fired from the project's advisory board after a conflict over how the money was to be spent.

The making of the Iacocca legend began with a reverse twist. After climbing to the presidency of Ford, he was unceremoniously dumped in 1978 by the company's tyrannical chairman, Henry Ford II, in one of the most controversial firings in American history. Meanwhile, the Chrysler Corporation, then close to breathing its last breath, grabbed up Iacocca as its emergency surgeon. Iacocca promptly jawboned the U.S. Government into massive loan guarantees, then used a classic mix of chutzpah, hucksterism and high-profile salesmanship to make the Chrysler comeback one of the great business stories of the postwar period.

That's when the unbridled public adoration began. Before long, Iacocca's take-no-prisoners pitch was popping up on TV screens nationwide, projecting the image of the self-made American who could still do things right, still punch the clock according to an older generation's work ethic. By personally going on air to hawk his wares ("If you can find a better car, buy it!"), Iacocca gave rise to a new era of highly visible corporate peddling. The tactic also lent him, the head of a car company with only an eight percent share of the U.S. market, visibility and influence far out of proportion to his actual business clout.

Within four years, Chrysler was back in the ring and competing with the auto industry's leading heavyweights, while Iacocca continued his campaign to burnish the industry's tarnished reputation for cranking out shoddy workmanship. By persuading the automobile workers' union to take pay cuts—and by putting former United Auto Workers president Douglas Fraser on the Chrysler board—Iacocca ignited a spirit of teamwork not seen since the Fighting Irish had been asked to win one for the Gipper.

At Chrysler, Iacocca again stunned the world with a new concept in cars: the minivan. A roomy, stylish alternative to the family station wagon, the minivan has become a cash cow that other car companies, including those of the Japanese, are still struggling to match at a competitive price. For such successes, Iacocca has reaped ample personal rewards: His salary went from a symbolic one dollar in 1980 (a privation certainly eased by the $1,500,000 Chrysler paid to buy out his severance contract from Ford) to an estimated $20,500,000 in 1986—bonuses and stock sales included.

Then came the book: No shrinking violet, Iacocca agreed to write a memoir in 1984 explaining how he brought Chrysler back from the brink of ruination. Like its author, "Iacocca: An Autobiography "touched a nerve in the public. This was not just a car book; it was a combination morality tale and primer of shrewd business management. Consistent with Iacocca's now-Midas touch, the book became a runaway best seller, with sales of 7,000,000 copies world-wide. His second book, "Talking Straight," was published in 1988.

Born Lido Anthony Iacocca in Allentown, Pennsylvania, on October 15, 1924, the future business tycoon was one of a handful of Italian boys in a neighborhood jammed with Pennsylvania Dutch families. "We fought, ring and competing with the auto industry's leading heavyweights, while Iacocca continued his campaign to burnish the industry's tarnished reputation for cranking out shoddy workmanship. By persuading the automobile workers' union to take pay cuts—and by putting former United Auto Workers president Douglas Fraser on the Chrysler board—Iacocca ignited a spirit of teamwork not seen since the Fighting Irish had been asked to win one for the Gipper.

At Chrysler, Iacocca again stunned the world with a new concept in cars: the minivan. A roomy, stylish alternative to the family station wagon, the minivan has become a cash cow that other car companies, including those of the Japanese, are still struggling to match at a competitive price. For such successes, Iacocca has reaped ample personal rewards: His salary went from a symbolic one dollar in 1980 (a privation certainly eased by the $1,500,000 Chrysler paid to buy out his severance contract from Ford) to an estimated $20,500,000 in 1986—bonuses and stock sales included.

Then came the book: No shrinking violet, Iacocca agreed to write a memoir in 1984 explaining how he brought Chrysler back from the brink of ruination. Like its author, "Iacocca: An Autobiography "touched a nerve in the public. This was not just a car book; it was a combination morality tale and primer of shrewd business management. Consistent with Iacocca's now-Midas touch, the book became a runaway best seller, with sales of 7,000,000 copies world-wide. His second book, "Talking Straight," was published in 1988.

Born Lido Anthony Iacocca in Allentown, Pennsylvania, on October 15, 1924, the future business tycoon was one of a handful of Italian boys in a neighborhood jammed with Pennsylvania Dutch families. "We fought, but we assimilated," Iacocca remembers of his immigrant upbringing. "Education was the key." Iacocca's father, Nicola, was a successful businessman who made most of his money in real estate, though he once owned part of a rental-car business. He was also a taskmaster who rarely allowed young Lido to slip below the threshold of academic excellence. "[When I finished] 12th in a class of 900," Iacocca wrote in his book, "my father's reaction was: 'Why weren't you first?' "

The hard studying paid off. Iacocca graduated with high honors from Lehigh University and accepted a graduate fellowship to Princeton, where he earned a master's degree in engineering. Beginning his career at Ford with a rotation through several manufacturing jobs in Detroit, he realized within nine months that he was more of a salesman than a draftsman. The real action, he recognized, was in marketing and management. He promptly got a transfer.

The radical job switch meant sending Iacocca into the boonies of car selling—and into the teeth of an early-Fifties recession. Yet economic hardship only served to fine-tune Lee Iacocca's sales savvy (he began calling himself Lee when he grew weary of long-distance operators laughing at the name Lido), and he thrived on the day-to-day challenges.

By the early Sixties, it was obvious to Ford's top brass that Iacocca was a comer. His success in launching the sporty little Mustang spotlighted him as Henry Ford's chosen protégé and front runner for the company presidency. But then came his monumental falling out with Ford, his jump to Chrysler and his subsequent rocket trip to folk-hero status.

Despite Iacocca's success at resuscitating Chrysler in the early Eighties, today he finds himself once again facing trouble. After nearly a decade of steady profits, the company has just announced its second losing quarter since 1982, with profits down a whopping 65 percent in recession-prone 1990. Iacocca is faulted for a series of dubious moves, including the acquisition of the problem-ridden AMC (despite the popularity of the perennially best-selling Jeep), the production of a doomed Chrysler-Maserati luxury car and especially the failure to develop a new mid-sized car for the late Eighties—a shortcoming Iacocca pledges will be remedied within two years. There is also frequent talk of a Chrysler merger with a European white knight such as Volvo, Renault or Fiat. Iacocca insists that his company will remain solvent and that he faces nothing like the problems he had ten years ago, if only because he is sitting on four billion dollars in cash reserves that could help see Chrysler through some lean times.

To explore these and other critical issues with Iacocca (most importantly, his ongoing battle with the Japanese business establishment and the recent crisis over the politics and oil of the Middle East), Playboy sent veteran journalist Peter Ross Range to the Chrysler chieftain's headquarters in Detroit. Range's previous "Playboy Interview" assignments have included conversations with Sony Corporation cofounder and chairman Akio Morita and CNN owner Ted Turner. Here is Range's report:

"Iacocca is at once larger and smaller than life as personified by the jut-jawed mug seen in his TV commercials. He's a tall man who, on our first meeting, rose from behind a formidable desk covered with a yard-sale assortment of big black loose-leaf binders—sales reports from around the nation. He came toward me with a cigar in his hand and an impish grin on his face, as though this whole interview enterprise were a special lark that only the two of us knew about. 'Finally got to me,' he said, chuckling, explaining that he had held out for two decades before consenting to the 'Playboy Interview.' He was right on both counts: We had been dogging him for quite some time and, yes, now we'd finally nabbed him.

"As we held forth for our first scheduled 90-minute session—then stole an extra hour—I was struck by how much softer an impression Iacocca makes in person than when in public: The hard-charging, tough-talking executive surfaces only occasionally—most notably, when he embarks on charged topics such as Japanese trade barriers.

"But pensive or passionate, Iacocca never runs short of the energy to engage. He occasionally remembers to light his cigar—a Cuban-made Montecristo from a mysterious supplier he refuses to identify—but then it promptly goes out as he barrels into yet another lane of conversation. 'You're messing up my morning smoke,' he complained at one point—then launched enthusiastically into his next tirade: on education, Japan, car safety and Government regulations.

"From the general clutter in Iacocca's office—a football helmet behind his desk, a three-foot-high stuffed ram on the floor, a gallery of life-encompassing memorabilia on his walls—I soon got the impression that self-discipline is not Lee Iacocca's middle name. But, clearly, instinct is. Although he is rigorously implementing a two-and-a-half-billion-dollar cost-cutting program at Chrysler, I sensed in Iacocca a businessman of the old school, a guy who smells the territory and goes with his gut. True to his now-familiar style, Iacocca has greeted the problems of the decade—and various new crises at Chrysler—with a roar rather than a whimper. As the Japanese share of the U.S. auto market has jumped to nearly 30 percent, he has been touring the country with a message of warning about Japanese market restrictions—a mission that has made him the lightning rod of controversy in the already touchy U.S.–Japan relationship.

"This seemed a good place to begin our conversation."

[Q] Playboy: You've been storming the country this year, taking shots at Japan and claiming in television commercials that Chrysler cars are better than Hondas and Toyotas. Why the sudden competitive advertising?

[A] Iacocca: I was going out on these trips and saying that our cars would beat the Japanese cars. I was just using Honda and Toyota as examples. If you keep beating that drum, in the end, the customer's got to try your car. And when he does, he'll decide whether you're bull-shitting him or delivering. I think it's time to start beating the drums.

[Q] Playboy: But why the Japanese cars in particular? Honda is now considered the most popular car in America.

[A] Iacocca: I always go after the leader. All my life, G.M. was the leader. So when I was at Ford, we went after Chevy. Now Honda's the leader—the biggest-selling car—so I took them on. What should I compare myself with, the Yugo?

[Q] Playboy: Is Honda your toughest competitor?

[A] Iacocca: We really don't have any competition in the Jeep and minivans, unless you want to pay forty thousand dollars. But in the basic cars, I'd put Honda first and Toyota second. They are the two biggies. That's why, when I advertise our cars, I never denigrate Honda or Toyota—I never denigrate any car—because their cars are good. I just say our cars have gotten a lot better. We shipped a lot of crap in 1980; by 1985, it was much better. We think we're really pressuring Honda now.

[Q] Playboy: How do you try to match yourself with the leader?

[A] Iacocca: We get their cars, drive 'em and then tear one apart—just rip it apart. Then we say, "Here's where we've got to improve a little bit, and here's where we've got Honda by the balls"—for instance, with air bags.

[Q] Playboy: We'll talk about the air bags later. But let's stick with the Japanese: You've been accused of pumping out ads that stoke American xenophobia toward the Japanese, of simply bashing Japan.

[A] Iacocca: I'm not a Japan basher! Newsweek once put out a list of the top-ten Japan bashers and I didn't even make the list. Still, I'm called a Japan basher. Why? Because I did this TV commercial saying that Americans are getting an inferiority complex and our cars are as good as Japan's, so they call me a racist. Every time you turn up the volume in any way, the Japanese yell racist and everybody backs off. Why? Because we've got a guilty conscience in this country, and they know that over in Japan. They're playing back to us what we don't like to hear. It comes from our black-white problem. We're carrying around this guilt. We had a civil war over slavery, remember? That's the big stigma on our two-hundred-year record as a democracy.

[Q] Playboy: But do you ever just feel like bashing Japan?

[A] Iacocca: Well, privately. But I've never bashed the Japanese people, and I'm going to stay clean on that. You don't stoop to that level—my father told me that. So I never take on the Japanese people. If you look at anything I've ever said in a speech or especially in a commercial, you'll notice I've never taken on a Japanese individual or taken a shot at their culture or the fact that they're homogeneous. I've never used bad phrases. Yet all of a sudden, I'm the ogre.

[Q] Playboy: You use fiery words. In a newspaper column, you evoked images of the Forties, rekindling the anti-Japan sentiment of that era.

[A] Iacocca: Once, in an interview, I was asked about the recognition of Chrysler products in Japan, so I said, "Jesus Christ, they certainly know the Jeep—they saw enough of them in World War Two!" You know what I really wanted to say? I wanted to say, "But they always saw the ass end of the Jeep—running them over." Now, that would he Japan bashing, right?

[Q] Playboy: The actual wording in your column was, "They might be wiser men to look at why Japan is riding so high today. They should remember 1945, when America and the world owed Japan nothing but its contempt. And they should remember that Japan would be nowhere today without American generosity, humanitarianism, forgiveness and, yes, tolerance."

[A] Iacocca: You've got to point up the facts! You've got to remind them once in a while of our heritage—and theirs. You've got to remind them to play fair. After all, they made it by our opening up our markets. I don't see why that's Japan bashing.

These guys are aggressive. When you sting them and hurt them commercially, they fight back. It's a war. If we get too thin-skinned about it, then this country's got a problem. I'm a red-blooded American. I fight back.

[Q] Playboy: Your column was a reaction to the controversial book The Japan That Can Say No, by Sony Corporation chairman and cofounder Akio Morita and Japanese politician Shintaro Ishihara. Ishihara has accused America of anti-Japanese racism, and you wrote, "[Their] arrogance pours salt into an already open wound."

[A] Iacocca: That book is pretty bad, pretty bad. Morita took a powder and distanced himself from the book; he knew that Ishihara had gone off the deep end. For a while, they said they didn't think it would be picked up in Knglish.

[Q] Playboy: Weren't they being naïve?

[A] Iacocca: Now you're being naïve. You think a high-ranking politician and the top industrialist in all of Japan would write something that vitriolic and not expect it to be picked up? This wasn't Joe Tamimoto working down in the Ginza.

But I don't think they expected such a violent reaction to their theories that the Americans are so racist that we dropped an atomic bomb on them just because they were yellow—and that we didn't drop one on the Germans because they were Caucasians. We didn't even have the atomic bomb before World War Two ended in Germany.

[Q] Playboy: In his Playboy Interview [October 1990], Ishihara said—

[A] Iacocca: Listen. I knew you were going to bring this up, so I read the interview. Let me tell you: Ishihara is one of those revisionist guys who don't want to remember what happened, OK? Anybody who can say the rape of Nanking [in 1937] was Chinese propaganda—he probably forgot the date of Pearl Harbor, but I remember the hour! I'm from that generation, goddamn it! He's reading history and when it doesn't suit his own bigotry, he changes it. Why should I respond to a guy like that? The fact that a thinking, grown adult could invoke racism proves that he's a racist. I put Ishihara in the class of—to be polite—reactionaries. Everybody has his share of loose cannons and he's a loose cannon. I would hope that he wouldn't become the leader of the nation, because I don't think he represents the mainstream of Japanese thinking today.

[Q] Playboy: What about his comments that American business leaders such as you are at fault for the dire economic situation in this country?

[A] Iacocca: We're all at fault, I guess, for going astray. You can't point fingers. We must have done something wrong—our industrial policy is in disarray. The Government, the unions and the management—I give them all one third of the blame. That includes me on the management side. But to have these [Japanese] second-guessers pointing fingers and saying that because they've got their house in order economically, that makes them a superior race—well, I just don't buy that shit. I never will.

[Q] Playboy: "Look at Mr. Iacocca," Ishihara said. "He's irresponsible, incompetent, dirty dealing, and he says different things at different times."

[A] Iacocca: You will not provoke...I'm not going to call him names. I could call him better names than that—they'd be dirty, but more original.

We work hard every day and we don't like being called racists or bashers. The Japanese are feeling a little bit arrogant now. [Their charges] are all smoke screens—they're red herrings, because they haven't joined the free world yet when it comes to trade and business.

Listen, Morita's own son was quoted in Forbes magazine [July 24, 1989], saying, "My father's generation knew that they were playing by different rules from the West when it came to trade, but they pretended they didn't understand the rules. That's why they won." Now, that's according to the kid. I've never met [Akio Morita], but, believe me, we keep a book on the guy.

[Q] Playboy: In an article you wrote, you said that Japan has wrapped itself in a "Teflon kimono." What does that mean?

[A] Iacocca: "That's just an expression used to talk about peeling back this veil they've wrapped themselves in. It shows that they don't walk on water. They're not superior. Don't get an inferiority complex, Americans; they've got a lot of warts, too. Let's look at their weaknesses and exploit them like they do ours. Let's get together.

Notice: If I had written a similar article about Germans—who are much fairer in trade—and I said I wanted to peel back the Scotchgard Lederhosen, I wouldn't have gotten one line of criticism in any press. Why? You tell me.

When I wrote that, I never thought mentioning a kimono would be any different from people referring to us as the guys with the three-piece suits—the gray-flannel syndrome. I would never feel offended by that. But the Japanese are touchy about everything, especially if you get to them on any commercial basis. Then they really turn up the heat.

[Q] Playboy: Is this reverse racism?

[A] Iacocca: If you want to talk about racism, talk to a Korean [who lives in Japan]. Or talk to the Vietnamese boat people. Nobody took them in—but we took them, OK? But the Japanese are really pure; they don't want any of those guys contaminating their society. Historically, the most bigoted countries are the ones with absolute, pure races. They really get racist. Whether it's Adolf Hitler with his superior-race theory or the Japanese and the way they treat Koreans. We don't go for that jazz. And yet they call our country too heterogeneous.

[Q] Playboy: You're referring to the comments made in 1986 by former prime minister Nakasone, that American educational levels are pulled down by the presence of blacks and Hispanics.

[A] Iacocca: That blows my mind. Our diversity makes this country great. Sure, we argue more, we sue more—I know all that. But that's our damn strength. Our creativity comes from me and an Arab sitting down together. Yes, we get argumentative, but we're both Americans, we're citizens. But now I've got to hear this unadulterated crap that if you're not homogeneous and pure, somehow you can't resolve problems, you can't compromise, you can never get consensus management. It bothers the hell out of me that people believe that.

This subject gets me right in the groin. When I helped open up the Great Hall on Ellis Island in September, it was to honor our seventeen million immigrant parents and grandparents—all different—and a hundred million of us offspring. I don't think I have an Italian temper, but this gets me hot. It's saying, somehow, we did it wrong. The unsung heroes of our industrial revolution are the immigrants.

[Q] Playboy: But hasn't our diversity contributed to some of the country's current problems?

[A] Iacocca: Sure, there are conflicts. But with all our problems, this is still the kind of country I want to live in. This past century was our century totally. How did we do it? Diversity. Guts. Courage. We stuck with the program. That's why the world is so great.

We're the country that won the big war fair and square; the country that won the Cold War by hanging in there with your tax money and mine, until Gorbachev emerged and said, "That's what we want, too." And notice, when it comes to crunch time in the Persian Gulf, only the U.S. can pull it together. We're the only guys who'll play pivot. Who else would have stopped the madman, huh? Saddam Hussein, he's like a Hitler. What's Japan going to do as he lakes over all of Africa—protest?

[Q] Playboy: America did play the pivotal role in the Gulf crisis, but what about the cost? Can this country really afford such a huge commitment to the Middle East?

[A] Iacocca: It's expensive. The price of leadership for sending troops to the Persian Gulf was more than one billion dollars a month by October. [Secretary of State James] Baker says we're there for the duration. OK, I agree with that. But understand, as somebody wrote in one of the newspapers, the true cost of sending the Navy and the troops back and forth over there is like paying eighty dollars a barrel for oil. So we've got to get some of our friends to help pay.

Look at this! [Removes newspaper clipping from briefcase] I cut this out of The New York Times—the reason I cut it out is that I couldn't believe my eyes. It's a story about Tokyo's response to criticism that they're not pulling their share in the Gulf. Jesus Christ, that's the understatement of the year. But here's the thing that killed me: It says that Japanese auto makers have agreed to let their government use ships taking Hondas and Toyotas to the U.S. to pick up war material they bought from us and take it to Saudia Arabia. On the way over, they drop their product here. In other words, we've got to keep the oil flowing so they can build the cars, ship them over here and contribute to our trade imbalance of forty-nine billion dollars. We spend a billion dollars a mouth on troops, supporting Japan's ability to keep doing the same thing to us for another twenty-five years. And our Treasury borrows from the Japanese at [eight point eight] percent interest so they can keep sending the cars and make the imbalance worse. Pretty soon I say, "Oh, shit, I'm chasing my tail." If a red-blooded American doesn't respond to that, what the hell is he going to respond to?

[Q] Playboy: So what would you have them do? Fight in the Middle East?

[A] Iacocca: No. They always invoke the name of Harry Truman, or the fact their constitution forbids them to send troops. I say, "You've got it wrong: We don't want you to change your constitution and send soldiers. Just send money. Lots and lots of money."

[Q] Playboy: What does the Gulf crisis mean for the car business?

[A] Iacocca: The industry is on its ass, really down. Nobody's buying anything and people are worried about their jobs. I'm seeing all kinds of layoffs. Let's hope this doesn't last more than a year.

[Q] Playboy: The last two times there was an oil crisis—in 1973 and 1979—you downsized your cars and switched to four-cylinder engines. But in the past ten years, the trend is once again toward heavier cars with larger engines. Can you again reverse the trend?

[A] Iacocca: You can't force people to buy anything. So far, there isn't much change. You can't downsize anymore. That's like going on a diet and losing forty pounds, then the doctor says, "Lose forty more, then forty more...." Then you're dead. With all the technology, we might be able to get ten percent more fuel efficiency.

But it's true that the American public still goes for bigger cars. It's crazy; you have a four-thousand-pound car with a four-hundred-cubic-inch V-eight engine moving around a one-hundred-fifteen-pound woman. That's wasting gas and putting fossil-fuel emissions into the air. At Chrysler, our biggest monster is a V-six three-point-eight-liter engine; but these Cadillacs and Lincoln Town Cars with five-liter V-eights are selling in great volume. Chrysler is poised to make a lot of four-cylinder engines. But if I took the lead in building those cars, my epitaph would read, This guy was right, but he went bankrupt because he ignored his market. Much as I hate to say it, you still have to follow the market.

[Q] Playboy: How does the country avoid getting itself into another oil crisis?

[A] Iacocca: We have to get away from these continuous fluctuations in the price of oil. We'd be in less of a wrench if we had kept oil at twenty to twenty-five dollars a barrel instead of letting it fall to twelve dollars a barrel. What causes dislocations all over the world are these sudden, violent swings. I could be radical and say I don't think we'd be having this crisis if we had an energy policy. I've been saying for ten years that we need to raise the gas tax. If I were a leader, I'd give the country a dose of castor oil right now and say it was due to one guy: Saddam Hussein.

[Q] Playboy: Do you think President Bush understands the concept of an energy policy and an industrial policy?

[A] Iacocca: No. I think Republicans by nature don't want to understand it. They define it as some bureaucrat sitting around in a room picking winners and losers. Reagan snookered us by saying industrial policy was a dirty word because it was used by Jimmy Carter and Walter Mondale.

[Q] Playboy: So, in a way, the Gull crisis and the renewed attention to conservation have vindicated Carter's attempt to get Americans to save energy?

[A] Iacocca: Yes, but Carter just didn't say it right. He used the conservation ethic, turned down the thermostat and got blasted out of office. Sometimes it takes twenty or thirty years to prove that a guy was right. But at the time, it didn't seem politically right.

[Q] Playboy: Getting back to the question of racism toward the Japanese, you have been accused of fanning those flames.

[A] Iacocca: I get fucked by juxtaposition. I was in Monte Carlo a few months ago, watching Cable News Network in my hotel. Here comes a story: Racism is running rampant in the United States. West Los Angeles: people beating the shit out of Hispanics. Bensonhurst: white guys beating the hell out of a black. Somebody else is burning a flag. It's a wild tape. It shows the Ku Klux Klan, then Adolf Hitler, then some skinheads. And right in the middle, they drop me! Just because I did a commercial saying we're getting an inferiority complex and our cars are as good as the Japanese.

You journalists do it all the time. You can write something real bad and say, "Oh, by the way, not for attribution, but a guy said...," then you mention my name between two paragraphs. That's the same as putting me between the skinheads and the Ku Klux Klan.

[Q] Playboy: Ok. Then let's get basic: What's your real quarrel with the Japanese?

[A] Iacocca: We don't have free trade. We don't have access to their markets. They're beating our brains in! They are mercantilistic till hell won't have it. They're an island, a small enclave out there at the end of the world. But they've got to open up their thinking. These guys are dragging their feet. It's been forty-five years since the end of the war. It's time for them to join the big leagues.

The great free-trade dogma—you know, "Free trade forever"—is a charade. The Bush Administration took Japan off the unfair-trade list, but it kept India on. Can you believe that? What the hell's going on? They're still playing games down in Washington. And sure as hell, there's going to be a trade war—retaliation—if we continue to argue about oranges one day, rice another.

[Q] Playboy: Specifically, how should they change?

[A] Iacocca: For starters, they should open up their markets, open them up fully. Start playing fairly in that regard, OK, guys? It's a huge market, that whole Pacific rim. We're up to a fifty-billion-dollar trade deficit and they won't even buy our world-class F-16 fighter jet, which has the highest quality at the lowest cost. You just can't go on like that.

This Government under Bush, led by [Trade Representative] Carla Hills, says, "Oh, no, what we have to do is get our macroeconomics in order," which means, "Let's get our deficit down, then everything will be OK."

I say to her, "I could change that fifty-billion-dollar trade imbalance; thirty-five billion dollars of it is cars. I, Lee Iacocca, could cut two billion dollars in the morning."

"That's great. One guy? How would you do that?"

"Honda has agreed to sell up to five thousand Jeeps. Give me a commitment for fifty thousand, I cut a billion off the deficit right there."

[Q] Playboy: Has Honda agreed to sell up to five thousand Jeeps in Japan?

[A] Iacocca: Yeah, they're just now getting started. They don't have a light truck, so it's compatible with their product line. We asked our partner, Mitsubishi, to do it. They said, "We already built one, we don't need you." I said, "Yeah, but guys. remember, someday...."

The U.S. already has nineteen thousand American entrepreneurs and dealers selling Japanese cars, and for a long time, we didn't have one selling our cars in dual dealerships in Japan. The Ministry of Trade and Industry [MITI]—or someone—had put out the goddamn word not to do it. So Morita said, "Why doesn't he come to Japan and sell Jeeps on his own?"

[Q] Playboy: Well, why didn't you?

[A] Iacocca: We tried it three years ago. We did one study of a small dealership in Tokyo. The land would have cost us twenty-three million dollars; Japan is a little island. By the time I bought the land and put right-hand drive in the cars [in Japan, vehicles are driven on the left side of the road], with the low sales volume I could have expected, I would have gone bust before I even started.

[Q] Playboy: But you solved that problem with a U.S.–Japan joint venture that recently opened Chrysler dealerships in three large Japanese cities. So what's your problem now?

[A] Iacocca: Well, we also have ten transplants—Japanese and Korean car factories that have opened in the U.S. and in Canada. Every one is loaded like a Christmas tree with tax benefits from the individual states. But nobody's invited me to do a transplant over in Japan. I have a joint plant with Mitsubishi in Illinois, and that's where I could get the other one billion dollars off the trade deficit.

[Q] Playboy: From one plant? How?

[A] Iacocca: I could reverse the national content of the car we build there—the Laser, a very good car, by the way. Right now, it's seventy percent Japanese content and thirty percent Chrysler content. So I just reverse it—put in one of my designs—so that seventy percent of the content is ours and not coming over in boxes from Japan. We're going to talk with Mitsubishi about this. We're hopeful it will work out. Otherwise, we'll have a big, big argument over the thing.

[Q] Playboy: More than two thirds of the Laser is Japanese-built?

[A] Iacocca: Yeah, and that brings up another job I think our Government should do to help us: There should be a truth-in-local-content law. When you say content, you're trying to relate it, like unions do, to how many jobs you have. The Japanese pretty well control all the sophisticated stuff on these cars. What they use from us is the assembly labor and little automated stamping plant, and they buy the tires and batteries. Essentially, the rest of the stuff comes from them. And that's the kick in the pants to me.

[Q] Playboy: Why?

[A] Iacocca: Take just the car parts. How many parts do you think the U.S. car makers buy from Japan? We spend eleven and a half billion dollars a year! Morita and others ask why we buy so many parts from them. I say, "Well, that's what free trade is all about: the best quality at the lowest price." How much do you think they buy from us? Only five hundred million dollars! That's an eleven-billion-dollar imbalance just in parts!

[Q] Playboy: Maybe the Japanese feel that your components aren't up to their standards.

[A] Iacocca: Then I say, "Don't give us this crap that we're not good." [The American parts manufacturers] sell fifteen billion dollars a year to Germany, Europe and the rest of the world. If the U.S. can sell parts to Mercedes—like we did at Ford, with our speed control—that proves we have quality and competitive cost. G.M. and I are partners—we build the best four-wheel-drive equipment in the world. Truck transmissions. We are two powerhouses, two of the biggest companies in the world. And Japan doesn't buy shit from us, OK?

[Q] Playboy: Do you really think that even if Japan fully opened its markets, we could sell them enough product to make a real dent in the trade deficit?

[A] Iacocca: We will never sell a million cars in Japan. Never. But how about other products? And how about those F-16 fighter jets?

[Q] Playboy: The Reagan Administration signed a deal to build a joint fighter aircraft with Japan rather than sell them our F-16.

[A] Iacocca: The new Administration inherited the deal from the Reagan Administration, and they know we got snookered. Take that as gospel. I was down at the White House one day talking to a high official—I won't say who—and said, "Why don't we just renege? The Japanese change their minds." He said, "That would be like breaking a contract." I said, "The Japanese break them when it suits their purpose." But what I really think is that maybe they had us by the balls.

[Q] Playboy: How so? Do you know something we don't know?

[A] Iacocca: I can't prove it, but I think maybe there was some Japanese pressure—somebody saying, "Hey, we're buying all of these bonds and taking care of your debt. We may not come to your financial markets for a while. We could really put you in a tail spin, so you'd better talk turkey with us." The U.S. was in a crisis then at the Tuesday bond auctions.

So what I worry about as an American is our financial destiny, which I think is floating somewhere out in left field. We're just too dependent on those IOUs.

[Q] Playboy: Let's get real fundamental. In the past twenty years, older companies such as Toyota, Sony and Honda started making great products and going for the overseas market—

[A] Iacocca: And they said, "Screw our own market. We'll send everything we have overseas. If we have to dump [sell below cost] to get our beachhead, we'll dump." And they did.

And look what happened next. In 1985, the dollar–yen exchange rate changed. After that, American products cost less overseas. My sales went up five thousand units in Korea, five thousand in Taiwan; we're up to fifty thousand now in Europe. But how come I'm up only a thousand in Japan? How come Japan is the only country in the world that didn't respond to the reduced costs of our cars? The Japanese market is rigged, I'm telling you. The son of a bitch is rigged! It's rigged!

[Q] Playboy: OK, So if Japan opens its markets, what's your second wish?

[A] Iacocca: Simple: Get the cost of capital down. Do whatever it takes to get my interest rates from ten percent to seven percent. I would show you a lot of Chrysler car sales starting tomorrow. In Japan, the banks work very closely with certain companies and have very low interest rates. When I get up in the morning, I feel like I'm taking on Toyota, Honda, the Bank of Japan and MITI.

[Q] Playboy: But the U.S. is dependent on relatively high interest rates to finance its budget deficit, right?

[A] Iacocca: Exactly. We give Japan our IOUs, which they take and say, "Hey, as long as we have them, you'd better keep that goddamned interest rate at nine or ten percent or we may go to Germany with our investment capital." Or they say, "We have so many of your IOUs, we'd better swap some of them in. So we'll buy Rockefeller Center." And then everybody goes apeshit. Well, what are they supposed to do with the money? They can't put it under a mattress.

[Q] Playboy: How much trouble is the United States really in with its twin deficits—trade and budget?

[A] Iacocca: If I didn't work at Chrysler, I'd tell you how deep. But every now and then, I go off the deep end and our dealers say, "Jesus Christ, people weigh your every word and you're depressing them. You might create a self-fulfilling prophecy and cause a bigger depression."

But I think our politicians are trying to conceal from us how bad it is. They said the S&L losses would be three hundred billion dollars; now they're maybe five hundred billion dollars. They really cooked the books! They were even going to show a fifty-billion-dollar profit by having this mess. Talk about creative accounting. Now they've decided they're going to put fifty billion dollars on the books and the other two hundred fifty or three hundred billion dollars they're not going to show. It's going off the balance sheet and they're going to sell bonds. Well, who the hell are they bullshitting? It's a liability on somebody's books.

[Q] Playboy: So what do you propose?

[A] Iacocca: The first thing is, we have to start living within our means. We should produce more and consume less. We should save more and borrow less. Geez, I sound like Ben Franklin. Anyway, for openers, let's cut the budget deficit in half; interest rates will come down and we'll have a boom. Then we can start digging our way out of this hole and not be so dependent on Japanese money. It's one thing to get hooked on a Sony Walkman, or on a Toyota. But when you get hooked on their money, you're hooked.

[Q] Playboy: Specifically, how do we cut the budget deficit in half?

[A] Iacocca: You go where the money is. The same as Willie Sutton: Why did he rob a bank? Because that's where the money was. I was on the National Economic Commission from 1987 to 1988 and we went to the Defense Department—that's where the money was. This was pre-Gorbachev. We said, "Fake a five percent cut right off the top for inefficiency."

[Q] Playboy: What about the thorny issue of income taxes and President Bush's turnabout on his "No new taxes" promise.

[A] Iacocca: I went to see George Bush at his house before he was elected. I've known George for a long time, he's a good guy; I didn't even call him Mr. Vice-President—just George. Anyway, I remember it well: He was seventeen points behind Dukakis at the time, and I said, "George, why would you want to be President and have the deficit nipping at you day and night? Kill it quick. Fake a good shot at it. It will make the next four years much more pleasant." Then I said, "Look, why don't you use the National Economic Commission as a sheet to windward? You can say these distinguished, bipartisan people came up with a wonderful program that you decided to present to the American people."

[Q] Playboy: What was his response?

[A] Iacocca: I'm not going to tell you everything that was discussed, but basically, he said, "I've got to get elected first." Of course, I didn't know he'd go way out on the cliff and say, "Read my lips." That boxed him in.

[Q] Playboy: And he won the election.

[A] Iacocca: Yeah, everybody was spooked by what happened to Walter Mondale when he mentioned taxes in 1984. Now the Republicans can say, "We got elected by saying no to taxes."

It reminds me of Ronald Reagan. You've got to give him credit for one thing—he had a very simple message: "Everybody who wants a strong defense so that we stand tall in the saddle, raise your hands." Everybody shouts, "Yeaaahhh!" "OK, I'm going to give you a defense budget of three hundred billion dollars, because Carter screwed it up. Now, anybody who wants their taxes reduced at the same time, raise your hands." "Oh, that's my man." Talk about a communicator.

[Q] Playboy: Back in 1984 and 1988, people were talking about you as a potential Presidential candidate. In fact, polls once showed you beating both Bush and Dukakis. What about it? Would you run?

[A] Iacocca: I think I should start a third party just to shake things up. I would never win, but I would like to get twenty-five percent of the vote and scare the living shit out of some people, bring them back to their senses. The problem is, I don't believe in doing anything you know you're not going to win.

[Q] Playboy: So would you run?

[A] Iacocca: Not really. I'm not that dumb that I'd want to get into politics. I wouldn't run for President, simply because the Lord's already touched me and said, "I'm going to give you a taste of how bad it is: You are going to be head of the commission to restore the Statue of Liberty and Ellis Island." It sounds innocuous, but it almost drove me nuts. I helped raise three hundred fifty million dollars, and they end up firing me.

[Q] Playboy: What for?

[A] Iacocca: Because the guys down in Washington didn't realize the American public was pouring out its heart. When they saw three hundred fifty million dollars coming in, they couldn't wait to get their crummy little hands on it. They put out a new rule: A man who raises money should have nothing to do with spending it. I asked myself, If I'm having this much trouble doing something as beautiful as restoring a symbol—which should be fun—how would I like to live in Washington every day?

[Q] Playboy: So that scared you off.

[A] Iacocca: It taught me a lesson. But if I died and went to heaven, what I'd like is this: to have a President come to me and say, "I need a Mr. Inside to be my C.E.O. while I'm chairman of the board." I'd like to do that. I'd like to be the inside man. I'd like to run the economic side of the business. People say I'm a crisis manager. In a way, I am.

[Q] Playboy: Do you have some solid ideas about what this country's leaders should do to turn things around?

[A] Iacocca: Oh, hell, yes. For starters, I think the President ought to have one six-year term. Otherwise, all he's thinking about in his first term is how to get re-elected. If I were President, I'd come in and say, "Here's my plank, elect me for one term and I'll deliver: One, educate everybody. Two, take care of the sick and the aged." Any society that can't take care of their aged or their handicapped is a sick society. And then I'd take one third out of the defense budget—despite the Persian Gulf crisis. And I'd be on TV every thirty days giving you a synopsis of how we were doing.

[Q] Playboy: Have these issues been overlooked by recent Administrations?

[A] Iacocca: I once asked President Reagan, "What policies are there? What's your monetary policy, what's your fiscal policy, what's your trade policy, what's your tax policy, what's your energy policy, what's your environmental policy? Tell me in twenty-five words or less." Of course, he didn't know what the shit I was talking about.

[Q] Playboy: How has President Bush responded to your suggestions?

[A] Iacocca: Oh, Bush knows my poems cold—he's tired of hearing it from me. He likes me; he even tells his guys, "Listen to what he's saying, because he knows how to say it and sell it."

[Q] Playboy: What kinds of policies do you want to help formulate?

[A] Iacocca: Industrial policy. I hate to use the words—they're dirty words in our system. The Republicans say, "There's no way we're tampering with this wonderful system of ours"; but this wonderful system is losing! And when you're losing, you say, "Hold it! Change your ways!" A good manager doesn't sit around when he's getting his brains knocked in.

[Q] Playboy: Do you think we need a MITI like Japan's?

[A] Iacocca: We need something like it. There are certain areas where we should not pick winners and losers but maybe pick industries that we think are important. We thought we were the world leader in microprocessors, but Japan has caught up with us, and now they're going to pass us. We need a better organization at the highest levels of Government to understand what trade and commerce are all about.

[Q] Playboy: The notion of Government directing business sounds like heresy, coming from a captain of capitalism.

[A] Iacocca: Look, let's be honest. We've had industries that have always had a lot of subsidies, such as agriculture and aerospace. If biochemistry or medical breakthroughs are important, we should probably do more than just support the National Institutes of Health. If we want to rule the world in supercomputers and the seed money isn't there, the Government should be subsidizing the launch.

[A] How did Japan do it? We taught them. They had cartels before the war, and General Douglas MacArthur went in and broke them up. But now Mitsubishi—well, God, now they're huge. Mitsubishi has an aerospace company, they have electronics, they have autos, they have the bank. If one of their people has a good invention or something, but he's having trouble, they just call everybody together as a group. They say, "We're going to take care of the poor black sheep of the family for a couple of years and eventually he'll pay it back." They've got a system of everyone protecting one another. Why don't we work out something to help one another?

[Q] Playboy: So you think we should have zaibatsus—the old Japanese cartels? And Chrysler would have a bank and a shipbuilding company and consumer electronics and—

[A] Iacocca: I don't think it's in our nature to do that; that would be like changing the whole goddamned system. So I've got to watch what I say here.

[A] We don't have to have the zaibatsus or the interlocking managements. That would be heresy; it would go against our country's history—our laws, the Sherman Act, trust busting, the railroads, the oil companies and the big robber barons. They got so much control that they were ruling the whole country and setting the prices. Still, our whole system has got to be redirected a bit to the stakeholders and not just to the stockholders. Somewhere in the Eighties, we lost our way. I think it came from Wall Street and the scramble for the fast buck. We've got to think about people's jobs, the people who pay the taxes, and maybe those who don't pay taxes when their plant is closed. Then a town like Detroit only gets seedier because there's no tax base.

[Q] Playboy: But relying on the Government to come up with an industrial policy breaks with America's laissez-faire business tradition. Why would you even consider this?

[A] Iacocca: Because I've had experience with it. When Chrysler almost went bankrupt, the only way we could make it was by having an industrial policy—Government and management and labor in the same room saying, "We're all going to sacrifice." That's when I said, "OK, the first year, I'll work for one buck."

[Q] Playboy: Fine, but you sure made up for it on the other end when Chrysler became a success: You earned more than twenty million dollars in 1986.

[A] Iacocca: That was because when I came to Chrysler, I took a whole lot of paper—stock options—instead of salary. Chrysler stock was then at its lowest [three and one eighth dollars] per share. But we decided I shouldn't get it at below par, so I got it at six dollars. I still have a lot of it. I've watched it go up and watched it become worthless again. When it hit fourteen dollars, I kept hearing, "Dump it, dump it. Take your fourteen dollars—that's a hell of a profit from six dollars." But I didn't sell mine at fourteen dollars. Each year, I would just take a certain slug and cash it in. At its peak, with splits, it was up to one hundred dollars.

[A] So I don't apologize to the banks that rode with me. I don't apologize to anybody for the fact that I had confidence in the company. Everybody who held on went up with me on that same tide.

[Q] Playboy: Not the guy on the assembly line. Even if he held on to his stock, he's still in a different world. The fact remains that, under your contract—with salary and stock options—you made almost forty-six million dollars in a four-year period.

[A] Iacocca: The board gave me that contract because they felt that I was a good ballplayer and they wanted to make sure they kept a no-hit pitcher. They also wanted to make sure I didn't get rich fast and take a powder on them.

[A] It's tough to define making money to the guy on the line, because there's no difference to him between one million dollars and one hundred million dollars. We've had some profit-sharing years, but now he's making thirty-five dollars an hour with fringes. There aren't many jobs elsewhere for thirty-five-dollars-an-hour workers.

[A] And it is true that we've always paid executives fairly highly in the auto business. But our basic salaries are pretty nominal by U.S. standards.

[Q] Playboy: What do you call nominal?

[A] Iacocca: Well, I'm up to eight hundred thousand dollars a year now. After forty years, that's the highest I've ever been paid in salary. The auto business was always cyclical, boom or bust, and in the good years, you got a bonus that could equal your salary. You could make another eight hundred thousand dollars.

[Q] Playboy: Does making so much money play a big role in motivating you?

[A] Iacocca: Not at all. After the first couple of million.... Anybody who is motivated by just trying to keep score, to see who's the richest guy—well, I'm just not built that way. You can't take it with you, so what's the motivation? I was making good money when the Ford Mustang came out, because it scored. I was thirty-nine. I said, "Geez, I don't know what I'm working for, but I do know I want to pay back society," which I'm doing now with my left hand. I have the Diabetes Foundation, our education work with Reading Is Fundamental, and I started the Iacocca Competitiveness Institute at my alma mater, Lehigh University.

[A] When you start out, you're a materialist. There are certain nice little toys you want: a vacation house, a home with seven bathrooms, instead of one with two bathrooms like the one I grew up in. We don't need seven bathrooms, but it's part of the deal, right? I have a good standard of living, but I've never had an airplane or a horse or a boat.

[Q] Playboy: But you've had some nice cars along the way.

[A] Iacocca: Oh, yeah. I just bought a Lamborghini Countache.

[Q] Playboy: Bought? Doesn't Chrysler own Lamborghini?

[A] Iacocca: Oh, yeah, but that's a two-hundred-thousand-dollar car. Can you imagine me taking one as a company car? They'd be all over me!

[Q] Playboy: You come to work in a chauffeured Chrysler Imperial. Do you ever have time to drive your own cars?

[A] Iacocca: Sure. I like to drive a minivan. Just the other day, I bought a knockout MG roadster—it's red with wire wheels. I have a virtually new 1964 Mustang, blue and white, with the pony package, V-eight engine. My father gave me a Model A, an original, because he was in the Model A business.

[Q] Playboy: Where do you do your driving?

[A] Iacocca: In Italy.

[Q] Playboy: That's where you have your vacation villa and your vineyard. What do you do there?

[A] Iacocca: Read. Rest. I just put up five hammocks. I also have a bocce court. Bocce's good exercise—you get in big fistfights, but it's good exercise.

[Q] Playboy: Do you find yourself returning to your Italian roots as you get older?

[A] Iacocca: A bit, yes. When I grew up in Pennsylvania, my sister and I were trying to assimilate, so we didn't talk Italian. But my daughter speaks and writes it fluently. I think we skipped a generation to go back to the roots. But it's a shame we don't have those big Italian Sunday dinners anymore, with fifty people around. There are no neighborhoods left, so where the hell are you going to find the people? They're all on a jet going someplace. It's a crime so much of our culture has been crushed.

[Q] Playboy: We're told you like to cook Italian food.

[A] Iacocca: I went to cooking school in Modena, Italy, with my daughter. We got pretty good. Knock you dead with some veal dishes—osso bucco and saltimbocca. If you want a great pasta dish, just make some semolina pasta. Then take a couple of cloves of garlic and olive oil—my olive oil, the best virgin olive oil. Maybe throw some greens on it now and then for flavor, or a hot pepper. You can eat that day or night. But I've got to watch my weight. That's why I try to do the treadmill every lunch hour for thirty minutes.

[Q] Playboy: You've written that you lived in the lap of luxury at Ford—white-coated waiters, the works. What's it like at Chrysler?

[A] Iacocca: Tuna fish on rye at my desk.

[Q] Playboy: After the boom years of the mid-Eighties, the company now seems to be on the skids. You've taken losses in recent quarters, you've asked the unions to accept company stock instead of a pay increase, you've lost some of your highest executives in the past year. What happened?

[A] Iacocca: Wait a minute, this sounds like it's piling-on time. Sure, doing some extracurricular things like the Statue of Liberty project took my eye off the ball. But if I had thought that one guy had to watch everything in a company this size, a thirty-five-billion-dollar company....

Listen, I delegated to Jerry Greenwald, who delegated to Hal Sperlich, who delegated to Bob Lutz. Then you say, "Well, your guys as a team didn't score as highly as they might have." OK, what did we learn from it? Let's change it.

[Q] Playboy: Of the top men who left you last year, Gerald Greenwald's departure was the most devastating. He was your heir apparent.

[A] Iacocca: Yeah, Jerry's leaving was a blow. He was more than the heir apparent, and he was making plenty of money, too. But he got an offer of nine million dollars for just ninety days of trying to put together the financing for the union buy-out of United Airlines. And then if that worked, he was to stay on as C.E.O. and get more than a million dollars a year. But that's peanuts compared with stock he'd get from the union, which would be maybe up to twenty-five million dollars. When he flew over to Italy and laid the deal on me, he said it wasn't the money alone—it was the challenge. I told him he'd have plenty of challenge at Chrysler. But nine million dollars is enough to give any reasonable or sane man pause—win or lose, you get nine million dollars. That's a good summer's work, right? [As of mid-October, the attempted union buy-out of United Airlines had failed.]

[Q] Playboy: Do you fault him for leaving?

[A] Iacocca: Sure I fault him. Why not? He grew up with me. He'd been in the car business for thirty-two years, same two companies as me—Ford and Chrysler. Isn't there anything sacred anymore? Isn't there any loyalty to anything?

I told him, "Jerry, it's the Nineties. The Eighties were this kind of thing; you should have done it then, and I would have written you off as caught up in the Yuppie movement. But that's over. The mere fact that they can pay nine million dollars for ninety days shows that it's go-go time again. After you've drawn your nine million dollars—and even if you become C.K.O.—you'll still look back on all the friends you talked into coming with you to Chrysler, and it's still an act of walking out on the gang. Easy come, easy go." I even told him, "If you want to climb a mountain twice, do it with Chrysler."

[Q] Playboy: How high is the mountain you have to climb right now? Is it 1980 and possible bankruptcy all over again?

[A] Iacocca: No. That last mountain—the turnaround ten years ago—was like going up Mount Everest without any tools. That was climbing barehanded. Now I can relax at night, because I've got four billion dollars in cash reserves. I can meet payrolls and pay the suppliers on time. But I'd like to do more than just break even, which is all we've done for the past nine months.

[Q] Playboy: People have begun faulting Chrysler for the gaps in its car line: You don't have a small-car successor to the Dodge Omni and Plymouth Horizon; you don't have a mid-size car to compete against the Ford Taurus and Mercury Sable; your only real money-makers are the Jeep and the minivans.

[A] Iacocca: What the hell's wrong with our cars? I think we have a damned good product line out. The Spirit and the Acclaim are rated up there with the Hondas—we're selling the shit, out of them. And even though I can't advertise it, what gave me a real boost was Consumer Reports. Out of the fifty-nine cars they recommended in 1990, fifteen of them are Chryslers. OK, two are joint-design cars with Mitsubishi, and three others are Colts that we buy from Mitsubishi. But ten are Chryslers.

[Q] Playboy: What about a small car?

[A] Iacocca: We can't afford an Omni or a Horizon—we can't build a small car and make a dime. We just came out with our America series at seven thousand five hundred ninety-nine dollars; we'll get half the small-car drivers back that way. Everybody's chasing the law of comparative advantage. Japan wants to build its small cars in Korea now; Korea is probably going to let some developing nation like Poland do it, if they can get dirtcheap labor.

[Q] Playboy: And a mid-range car?

[A] Iacocca: That's coming for 1992-and-a-half. I'm the first to say I wish I had it today. But I made the decision—me alone—to develop the minivan first, a car that had never existed. We decided to do that as opposed to a new pickup truck. Each [vehicle] costs a billion dollars to develop, and I couldn't do them all at once. After that, we felt it was important to take care of the full Jeep line. So what we're missing is what is longingly called the pure middle and upper-middle end of the market—what we call our LH program.

[Q] Playboy: But it's those decisions that left you with the gaps.

[A] Iacocca: Look, there's a recession on. Chrysler is the smallest of the big-three car companies, and the transplants are coming on strong. So people say we have lackluster product. Where's the lackluster product? I go burn myself out on a six-city promotional trip that costs four million dollars; the press dogs me, led by the America bashers, the Japanese, beating my head in at every stop, saying, "How dare you?" I say, "Hey, I'm Willy Loman. I've got a smile on my face and a shine on my shoes. I'm out there hustling. I'm selling what I got. And what I got is pretty damned good! You want me to give up? Drop dead!"

[Q] Playboy: How much is the recession hurting you?

[A] Iacocca: There's no problem that a three-point drop in interest rates wouldn't cure. But there are too many cars being built right now for the American market. You get rebates up to twelve hundred fifty dollars a car, just when we're struggling to cut costs by two point five billion dollars at Chrysler. There's too much capacity. Ford and G.M. are in the tank, too—most of their earnings over the past two years came from overseas sales. We're expecting to sell fifty thousand minivans in Europe this year.

[Q] Playboy: You've extended your contract to stay on as Chrysler chairman indefinitely. Is that because you're on a crisis footing? Are you girding for war?

[A] Iacocca: I've got to be honest with you. Given the voices of my mother, my daughters and my fiancée—all of them asking, "What the hell are you staying on for?"—I just want to see our program for the Nineties unfold right; we've got a great program and we've got to implement this baby right. I've said I'll stay as long as it takes to get this thing back on the rails.

[Q] Playboy: Your planned joint deals with Renault and Hyundai fell through this year. Is it possible that Chrysler won't survive—

[A] Iacocca: This company will survive.

[Q] Playboy: Without a merger? Will there be a Chrysler-Fiat, a Chrysler-Hyundai, a Chrysler-G.M., for that matter?

[A] Iacocca: We already formed a joint venture with G.M. on the four-wheel drive, so I asked them about doing a small car together. The country needs it. We both say we can't make money; we go to Korea and Japan for our small cars. Of course, the antitrust guys might die. They'll say, "Building a transmission together was one thing, but a whole car? Are you guys crazy?"

[Q] Playboy: But what about merging?

[A] Iacocca: It's a matter of time frame—after the year 2000. We talked with Renault, we've been talking with Fiat, and I made big news by talking with Volvo. They called us, by the way. But can you imagine a merger with Volvo? They represent eleven percent of the G.N.P. of Sweden. All these companies recognize that there's going to be a consolidation of the world auto industry. They know that if you want to be a world player, you must have some presence in each of the big-three markets—the Pacific rim, North America and Europe. But you can't be all things to all people in all markets. So we're going to have to form alliances.

[Q] Playboy: What about your proposal to build a joint car with General Motors?

[A] Iacocca: Well, at first, they didn't throw it out. And it may come to pass one day, because the world is changing. But our laws are stupid; we're stumbling in our underwear. G.M. and Toyota can get together to build joint cars at the NUMMI plant in Fremont, California, but I can't [legally] do a joint small car with G.M., because I'm U.S.-based. You can do a deal with the enemy, but not with me. There are only three of us left in the U.S., so what's the big deal?

I still dream about my "Global Motors" concept—say, a consortium of Chrysler, Nissan and Volkswagen where we pool our efforts on huge capital investments like engines. But it's hard enough to slam together two companies that come from the same culture. A true merger—bringing together a Mitsubishi and a Chrysler, even after holding hands for twenty years—would be real tough.

[Q] Playboy: Because of exchange rates and import quotas, the price of Japanese cars rose dramatically throughout the Eighties. But you and the other American car makers didn't take advantage of the import protection. You raised prices, too, and had a sales boom, but the consumer suffered.

[A] Iacocca: Well, as usual, that's poppycock. If you want facts as a journalist, take the facts. If you want to twist them into an opinion, then you got the pen in hand, not me.

The facts are, with all the currency changes in the past five years, imports—particularly German and Japanese—have gone up, on average, thirty-eight percent. Chrysler has gone up eight percent, which is less than the consumer price index; G.M., because of a richer mix, probably, has gone up about eighteen percent; and Ford has gone up about sixteen percent. You can see it on the sticker prices; but nobody wants to believe it. So we're going head to head with Honda. We say the Spirit and the Acclaim have everything a Honda's got, but for twenty-five hundred dollars less. And I throw in an air bag for free.

[Q] Playboy: Let's talk about the air bags. Since late 1989, you've led the industry toward air-bag installation by putting a driver's-side air bag in most of your U.S.-built cars, excluding the minivans. Why the sudden turnaround?

[A] Iacocca: I adapt to facts. I try to preach to kids that when you get additional facts, you can change your position as life goes on. Don't feel that you're a goddamned hypocrite if you change your position every few years.

[Q] Playboy: Still, you were among those who practically said that air bags might cause accidents.

[A] Iacocca: My record on safety is impeccable. I was gung-ho into padded dash-boards, deep-dish steering wheels and, especially, seat belts with the interlock system so you couldn't start your car without being belted.

[Q] Playboy: Well, your record also includes a conversation in 1971 with President Richard Nixon—it's on the famous White House tapes. You said, "Safety has really killed all of our business." You were fighting air bags tooth and nail then.

[A] Iacocca: I don't recall saying that. Henry Ford and I went to Washington to say, "They're moving too fast on air bags."

[Q] Playboy: But it's on the tapes—

[A] Iacocca: I didn't know we were being taped at the time in the Oval Office, but I do remember that, on the way out, the President of the United States got up from behind his desk [stands and waves his aims, Nixon-style] and said, "Well, I don't want one of those goddamn things in my car." I kiddingly said to Henry, "God, somebody should have heard that last line." I remember that part clearly, because Nixon leaped to his feet.

But, hey, I'm like a [recovering] alcoholic. I'm a convert now to air bags.

[Q] Playboy: What took you so long?

[A] Iacocca: We kept watching the air bags. Watched them go off, watched them fail. Watched them cost a thousand dollars. Electronic sensors weren't reliable enough. But in the past few years, the air bags were becoming reliable and the cost was down to about eight hundred dollars. Meanwhile, Volkswagen invented the passive seat belt; then the belts became motorized. They cost only about two hundred to three hundred dollars to install. So my guys are saying, "We think we can get the price of an air bag down to where the cost over the spaghetti and the motorized belts is only a couple hundred dollars." I said, "OK, it's time to go with them."

[Q] Playboy: Spaghetti? What's that?

[A] Iacocca: All the add-ons. So, anyway, I took a crap shoot on the air bags. But let's be honest, I had to worry about liability. Suppose somebody gets killed—even with the air bag—and we have a court case. Drivers may get a false sense of security from the air bag and leave off their seat belts, which is a big mistake. Remember: If you're not belted, the air bag isn't enough. I mean, shit, at sixty miles an hour, you're in motion, you can take a second hit!

I didn't know they would succeed this well and I didn't know putting them in would get to me emotionally. It's incredible, the letters I'm getting. Of the six thousand air-bag deployments so far, so many seem to involve young girls.

But now I really feel bad inside. I wish I could have done them twenty years ago.

[Q] Playboy: Now everyone wants to know when you'll start installing a passenger-side air bag.

[A] Iacocca: I know, I know. Once you start advocating safety and using ads that show young girls being saved by an air bag on one side, it begs the question, "Well, what if I had my boyfriend with me on the right side?" Joan Claybrook [former head of the National Transportation Safety Board and promoter of air bags] recently came up to me at a big awards ceremony. She congratulated me on finally seeing the light. Then she said, "What have you done for me lately? Where's the passenger-side air bag?"

[Q] Playboy: So, where is it? Honda has promised them by late 1993.

[A] Iacocca: We hope to have them on our new LH car in late 1992. First we've got to redesign the whole instrument panel. It'll cost about seventy or eighty million dollars a hit. Passenger-side bags are harder to design, because there's no steering column and the seat is farther away. Knee blockers are the problem. You don't want to submarine when that bag hits you.

[Q] Playboy: The time it took to implement air bags is just another example of the American automobile industry's reputation for foot-dragging, for having to be dragged kicking and screaming—

[A] Iacocca: For being monolithic. We were controlled by General Motors; we've marched in lock step to the big guy. It was an oligopoly of four guys—back when we still had American Motors. Now we're down to three. But there is no question that G.M. set the pricing, they set all the levels. Everybody tried to imitate G.M., and they were building lousy quality. They didn't do it on purpose, but we all said, "That's the standard." I'm a student of this—I lived through it. G.M. was so powerful. They were the biggest bank in the world, the biggest everything. They had fifty percent of the market. They were so damned big, they could do anything they wanted. We were really in the ring with a thousand-pound gorilla.

[Q] Playboy: What changed all that?

[A] Iacocca: Looking back on it, foreign competition spurred on Chrysler and even big G.M.—starting with the German boutique houses of BMW and Mercedes. That began to change a lot of people's minds. Then the Japanese came in and started showing quality just by selling ten or twenty thousand cars. You'd be a fool not to admit that free world trade and competition is good. Otherwise, we'd still be the monolithic follow-G.M. group, and the cars wouldn't be as good. G.M. has taken the biggest hit. Their fifty percent market penetration is now down to thirty-five percent.

[Q] Playboy: Ford has been noted for a strong turnaround, with radically redesigned cars in the Eighties. What are they doing right?

[A] Iacocca: Well, developing the Taurus and the Sable was a fresh, clean-sheet approach, not the usual Detroit way of building a car. They didn't committeeize it. They put together a team, the same as we've now done.

[Q] Playboy: What was the usual Detroit way?

[A] Iacocca: Sequential design. First the design guys work. Then they pass it on down the line to the manufacturing guys. Then the manufacturing guys say, "Hold it, we can't build this son of a bitch. This design has eight different pieces, it'll kill us." And so forth.

Now we've reorganized the whole company. With our new LH car, we have everybody on one team right from the beginning: design, manufacturing, engineering, marketing. The car is theirs from cradle to grave. Even the suppliers are tied in early enough to give their input on how to save money, or how to do the vanity mirror for half the price.

We had a mixed-generation team in here recently, critiquing the minivan. Little kids lying all over the floor. One of them came up with a neat little design change. He suggested we take out the springs in the coin holders in the console and let gravity feed the coins down. It'll probably save eight cents a car. But it's so damned simple. One of the other teams came up with a car phone that is built into your sun visor, so you don't have to look down and take your eyes off the road. It has a little microphone in it.

[Q] Playboy: What is going to save the auto industry?

[A] Iacocca: Competitiveness. One, get the action back on the factory floor—make it a matter of pride to be running a plant yourself. And two, get good minds coming into industry from the scientific community. We looked at the farm system—the junior high and high schools—and nobody's taking math or science. Ask the schools about that and they say there are no teachers—"The football coach does that shit."

[Q] Playboy: Should the Government be involved in making this country scientifically competitive with countries such as Germany and Japan?

[A] Iacocca: Sure. I've suggested a way to use the peace dividend for that. Look at the defense and aerospace contractors. They're going to be laying off some of the best scientific minds in the country. These are guys who are used to working for Government pay. Why not let the Government pay them to work with us, for instance, in licking the national problem of carbon emissions?

[Q] Playboy: Is pollution control the great sleeper issue that will someday undermine the car business completely?

[A] Iacocca: You can play word games all day long on that. I think the hotheaded environmentalists have gone overboard. They say, "We're sure you can find a technological solution to car emissions. After all, ten years ago, you said you couldn't make it and you made it." I say, "Yeah, but all the cars got twelve hundred pounds smaller. If we take another twelve hundred pounds off, there will only be little shit boxes running around the country."

But, yes, we're certainly studying the pollution problem. Take Los Angeles: They've said that by the year 2008, they will effectively [eliminate the use of petroleum as fuel]. That means they will have outlawed the car as we know it, and we'll have to have a breakthrough in battery technology for an electric car by that date. But what they haven't figured out is where the energy will come from to power the batteries. Will it be coal or oil or nuclear? What the hell is it?

[Q] Playboy: You've called G.M.'s experimental electric car nothing more than a gussied-up golf cart. Obviously, you're not optimistic.

[A] Iacocca: Twenty-five years ago, at Ford, I gave the engineering guys in the lab a million bucks a year to come up with an electric car that could get me home and back—say, eighty miles round trip—without a recharge. "Go invent a battery and then we'll build all the fancy cars around it." And they couldn't do it. So I said, "Get lost, busters." Twenty-five years later, I don't think there has been any movement at all. We have to work on flexible fuels, propane, a methane mix, plus there are storage problems.

[Q] Playboy: Does it burn you up that, while the U.S. concentrates on solving these kinds of problems, the Japanese spend their energy turning out better and more attractive cars?

[A] Iacocca: Look, I say, why get mad at the Japanese when they're just dealing in their own self-interest? I've always said we can learn from Japan just as they learn from us. Let's copy them. Let's get rid of antitrust, certainly. Then we can all get together in the same room and do things like pollution control at the lowest possible cost. They do it. They think that's for the common good. To get cleaner air, they all pool their resources. They don't make it a competitive, dog-eat-dog thing.

Of course, I don't want to be like them in every way. I wouldn't want to live in one of their tiny houses; I wouldn't like their standard of living; I wouldn't want to pay eight dollars for a melon or four dollars for an orange or never eat steak.

[Q] Playboy: What else do you admire about their society?

[A] Iacocca: Well, one thing that always sticks in my mind is that while we have something like one lawyer for every ten people in our country, they have one engineer for every ten people in theirs. And that tells you a lot. There's something wrong with a country that has so many lawyers. Chrysler builds a complex product that is sold world-wide, so we have a lot of liability cases. And sixty percent of all the money we're spending—millions and millions of dollars—is going for lawyers' fees. There's something screwy there.

Somebody once said, "The best way to beat the Japanese would be to send them all our lawyers."

[Q] Playboy: What's going on with the business establishment of this country? The Donald Trumps, for instance.

[A] Iacocca: I know Trump fairly well. Now that's an ego that's gone screw-loose, gone haywire. What the business establishment of this country has to do is get away from this new financial-transaction mentality. It used to be that Wall Street, the financial markets and the banks were there to promote and fund the companies that produced goods and created jobs. Now they've taken on a life of their own: "What's the play? Where can we make a fast buck?" What we really need to do in this country is get back to the factory floors. Whether it's Chrysler or McDonald's or whatever, you've got to stand for making good stuff or you're not going to win.

[Q] Playboy: Whatever happens, you've carved out a niche for yourself in history. What's the secret? What has made you a national icon?

[A] Iacocca: It started with being fired at Ford. When I did the Mustang, nobody really gave a shit. But when I was fired and then rose from the ashes like a phoenix—let's be honest—that kicked it off. It's the American feeling for under-dogism. I'm fired [from Ford], Chrysler is in the toilet and they come to me. I go to work and say, "Jesus, if I had known it was this bad, I wouldn't have taken the job." Then we get a break—we're not geniuses, we just worked hard to get it. We had to go before the Congress and get abused in public. Then the Reagan years helped us. Let's face it: The industry turned around a bit. Otherwise, we all would have died. Ford was in the toilet. G.M. was in the toilet.

Meanwhile, my personal life was moving very fast. My wife was dying. And she had always said, "Why don't you write some of this stuff down? It's a little fictional and nobody is going to believe it." So I wrote my autobiography.

[Q] Playboy: How did that come about?

[A] Iacocca: Well, in 1983, we paid back our one-billion-dollar loan—the old-fashioned way: seven years early. That hit a nerve with the American people. They said, "That's what we're made of—or would like to be made of." So in 1984, I wrote Iacocca: An Autobiography. It sells seven million goddamned copies. How do I know it's going to push Gone with the Wind? You think that's why I wrote it? But it never did pass Jonathan Livingston Seagull, damn him.

[Q] Playboy: Why do you think it was so popular?

[A] Iacocca: One day, at the Okura Hotel in Tokyo, all the bus boys and girls were standing in line for my autograph. They spoke English, so I asked them why they'd bought my book. They said, "In our hierarchy, we can never mouth off the way you do. We can never be vocal to our superiors or elders. But inside, we'd like to be like you." Another time in California, all these kids from the beach came up with my book. Said their parents had made them read it, but then they couldn't put it down. I must have changed ten or twenty thousand lives. I get a lot of letters from guys in prison. I take them home and read diem every night. And I still get more mail for my first book than for my second. You know the reason? Because it's an autobiography, it's a life.

[Q] Playboy: A lot of people have written books, but yours hit a national nerve. Why?

[A] Iacocca: If I had to pick one thing, it's this: If there were a lodge called the I've-Been-Fired Club, it would be a bigger organization than all the Catholics, Republicans or Democrats in the country. Because everybody at one time in his life has had his feet cut out from under him.

[Q] Playboy: Your television commercials have also helped your national appeal. You became a superstar on TV.

[A] Iacocca: Thanks, but they are a pain in the ass to do. They're not my bag. I've done my fill and I've destroyed my privacy. I want to hide now when I go out.

[Q] Playboy: People around Detroit and Chrysler are wondering if you're ever going to retire.

[A] Iacocca: Hell, yeah. I had a great plan to hand Chrysler over to a two-man management team last November first. But Greenwald, by leaving, knocked that on its ass. So I've agreed to stay awhile. I said to my top guys, "You want to do me a favor? In the next twelve months, make our program fall together and force me out of this company. I'll be grateful to you."

[Q] Playboy: Still, you give the appearance of a guy who doesn't want to let loose. Are you one of those car men who, as they say, have gasoline in their veins?

[A] Iacocca: Yeah, but I want to keep some blood in my veins, too.

[Q] Playboy: When all is said and done, and you're looking back on all this, what do you want your legacy to be?

[A] Iacocca: Oh, immigrant kid made good. Wrote a book. Unabashed patriot. Fixed up the Statue of Liberty.

After I retire, I want to devote myself to the Diabetes Foundation and working on education for kids. That's certainly a bigger legacy than building Mustangs or minivans. After all, in the end, who's going to remember whether we bent the sheet metal right?

"I always go after the leader. Now Honda's the leader—so I took them on. What should I compare myself with, the Yugo?"

"The Japanese don't walk on water. They're not superior. Don't get an inferiority complex, Americans; they've got a lot of warts, too."

"My record on safety is impeccable. I was gung-ho into padded dashboards...and, especially, seat belts."

"I didn't know putting air bags in would get to me emotionally. It's incredible, the letters I'm getting. I wish I could have done them twenty years ago."

"What we really need to do in this country is get back to the factory floors. You've got to stand for making good stuff or you're not going to win."