U.S. factory work is returning, but the industry has changed

GRIFFIN, Ga. — Giant machines are tearing down the old bleachery, another reminder to Chuck Smith that this old mill town doesn't make much anymore.

Just about everyone he knows was employed at one point making, folding or bleaching towels, until the mills started to close down in the 1990s and 2000s and family members lost their jobs. Like most of this town's residents, Smith can name all the old mills in a slow Georgia drawl.

"There was the Thomaston mill that was here, and the Dundee mill, and the Highland mill, but they tore that one down just like they did this one," he said, watching a bulldozer push piles of metal around what used to be a factory for bleaching towels. "These mills used to employ all the people in this city."

Recently, the town had a reason to be optimistic. Retail behemoth Wal-Mart announced that it would spend an additional $50 billion buying U.S.-made goods over the next 10 years. It cited 1888 Mills, which runs the last mill left in Griffin, as one company that would benefit from this pledge.

Wal-Mart will sell 1888's Made Here towels, manufactured in Georgia, in 600 stores this spring and in another 600 later this year, which enables 1888 to add manufacturing jobs.

The retailer's effort will help businesses and "give them the nudge they need" to bring manufacturing back to the United States, Wal-Mart Chief Executive Bill Simon said in announcing the initiative. It's part of a much-heralded trend of "onshoring," in which companies including Apple, Lenovo, Otis Elevator and General Electric have said that the growing cost of logistics and labor overseas has motivated them to move some manufacturing back to the U.S.

But if Griffin is any example, Wal-Mart's much-lauded pledge isn't likely to do much to turn around a decades-long manufacturing decline here or in the rest of the country.

That's because manufacturing has changed dramatically since it left American shores, replacing workers with machines and reducing the number of jobs that people could get right out of high school. And as much as companies pledge that they're moving manufacturing back to the United States, they're mostly moving just small parts of their larger global operations, to be closer to U.S. markets.

"People talk about manufacturing being a big source of job growth. It's going to grow, but it's not going to be a big source of total employment," said Tom Runiewicz, principal for the Industry Practices Group at IHS Global Insight. "It's just a drop in the bucket."

1888 Mills, for instance, will add just 35 jobs because of the initiative — better than nothing, but a pittance in a town of 23,000. The company will still make 90% of its goods in overseas factories.

"We don't envision the entire industry going back to the United States — low-cost Asian manufacturing will still be the base for volume," said Jonathan Simon, CEO of 1888 Mills. "But for just-in-time service, U.S. manufacturing does make sense."

Some 400 miles away, in North Carolina, computer giant Lenovo is doing the same thing. In October the company announced plans to open a manufacturing plant in North Carolina to make specialty personal computers for the U.S. market. The initiative will create 115 jobs, 15 of which are engineering positions. But the company also is expanding research centers in Japan and China.

"It's a relatively small-volume facility. It's not going to produce millions of units," said Mark Stanton, Lenovo's director of supply chain communications.

The United States lost 6.3 million manufacturing jobs between January 1990 and the industry's low point in January 2010, a 36% decline, according to the Bureau of Labor Statistics. Since that low point, the industry has added nearly 500,000 jobs — an impressive number, but one that barely begins to offset the millions of losses.

"There's a lot of unemployed people here," said Eugene Colquitt, 47, who was wandering the streets of Griffin, looking for work helping people on their yards or homes. He was employed at the mills at one point and says that not much has replaced the manufacturing jobs in town. "There's McDonald's and Wal-Mart, but they're not really hiring," he said.

A walk through the spacious 1888 factory in Griffin shows why job gains have been slow, despite some onshoring. Machines spin threads of cotton into yarn, a process once done by hand; they weave the yarn into thick rolls of fabric, cut the fabric into towels and sew the hems. Where a whole factory was once needed to bleach and color the towels, a Rube Goldberg-like machine does that work with minimal labor; another machine dries the towels.

"It's all automated," Douglas Tingle, founder of 1888 Mills, said during a tour of the factory. "Some of this is the latest technology advancements."

That automation is part of the reason that although labor costs are higher in the United States than in other countries, it can make sense to make towels and other products here. But there are other reasons as well. If 1888 needs to make changes to towels, it can get the finished product to Wal-Mart more quickly from Griffin than it could from China. With the rising price of oil increasing shipping costs, there could also be some cost savings for locally manufactured products.

"One of the things you might see is production coming back here, but not with as many jobs as used to be the case," said Jared Bernstein, a senior fellow for the Center on Budget and Policy Priorities and former chief economist for Vice President Joe Biden.

Whether the jobs returning are good ones depends on whom you ask.

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Pro sports leagues aim to put workers' comp out of play

One would think that we've learned from bitter experience not to trust a word uttered by our major professional sports leagues.

Yet here they are trying to put another howler over on us. This is their assertion that retired pro athletes — many of them from outside the state — are ripping off California's workers' compensation system for hundreds of millions of dollars.

The state Legislature is setting itself up to swallow this one whole: A bill to close this supposed loophole has been introduced by Assembly Insurance Committee Chairman Henry Perea (D-Fresno).

Let's start with the bottom line: This bill would be a total sellout to the major pro sports leagues and their billionaire team owners, who pay the workers' compensation claims won by their workers. Its victims would be athletes whose limbs, joints, backs and craniums were pounded relentlessly on the field of play and who were left with inadequate treatment or support after they retired.

Let's also home in on whose interests are most at stake: It's the National Football League, which is facing a tidal wave of legal claims related to long-term neurological damage suffered by players. Claims from more than 4,000 players and their families have been consolidated in a single immense lawsuit in Philadelphia federal court, where pretrial maneuvering has been lumbering on for months.

Among their allegations is that the NFL suppressed evidence that the concussions caused by its style of play could have long-term health consequences. The league has consistently denied that it tried to mislead players.

Perea's bill serves the NFL and the pro sports leagues and teams in basball, basketball, hockey and soccer. (Apparently lacrosse, rugby and softball leagues didn't have the juice to get their way in Sacramento.) It's purportedly a response to the upsurge in workers' comp claims filed by pro athletes, including many who never played for California teams, that started around 2007.

There were several reasons for the increase. Under state law, you can file a claim if you can argue that you suffered an injury in California, even if your employer was located elsewhere; it's a rare pro athlete who doesn't occasionally play an away game against a California team.

More important, California is one of nine states that allow workers' compensation for "cumulative trauma" injuries, those that build up over time. The most familiar of these are carpal tunnel injuries suffered by typists. But they also encompass knee or back damage from years of blocking and tackling, or neurological damage from repeated concussions.

"The NFL is not terribly worried about cumulative knee trauma," says Frank Neuhauser, a social insurance expert at UC Berkeley. "They understand what they're going to pay for that. But they're terrified of brain injuries, which can cost millions and result in complete disability." The NFL didn't reply to my request for comment on the workers' comp issue.

It's hardly shocking that the NFL and other major leagues would want to shut down this avenue of compensation. Nor is it very surprising that they would resort to disinformation.

"The NFL knows this could be detrimental to their bottom line," says attorney Mel Owens, who played nine years for the Los Angeles Rams in the 1980s and now represents athletes in workers' comp cases. "So they couch it in terms of players abusing the system."

The leagues' bid for sympathy depends on most laypersons having no idea about how workers' compensation works. So here's a primer. To begin with, taxpayers don't pay for workers' comp; employers do, either by buying commercial workers' comp insurance or (if they're big enough) self-insuring. Their premiums are overwhelmingly based on their type of business and their claims record. The premium paid by the employer of file clerks will be very different from that of a skyscraper builder.

Therefore, if California workers'-comp judges take a more liberal view of long-term brain injuries for football players (and as yet there's no evidence that they do), that may drive up premiums paid by sports teams, but it won't affect the premium paid by grocery stores.

The leagues "are trying to make it look like these are costs that will fall on all employers," Neuhauser says. "But it has nothing to do with current rates. Sports teams' premiums will go up, but not those for construction companies or anyone else."

Then there's the notion, also happily peddled by the leagues, that the athletes are getting away like bandits, abetted by aggressive lawyers. A 2012 analysis done for the NFL and the professional baseball, basketball and hockey major leagues by the benefits consulting firm Milliman Inc. estimated the cost of already-filed California cumulative trauma claims by athletes at $747 million.

That sounds like a lot, until you realize that it covers 4,500 players, for an average of $166,000 each, which includes the cost of medical treatment. Is that a lot for injuries that may be crippling for life and include Alzheimer's or other neurological syndromes? For a player judged partially but permanently disabled, the maximum benefit is $270 a week for up to 320 weeks. Long story short: No player is getting rich off these payments.

Nor are the players typically coasting into retirement with superstar nest eggs. Consider Reggie Williams. A standout linebacker who played 14 seasons for the Cincinnati Bengals, including two Super Bowls, he made $45,000 in his rookie year, 1976, and topped out at $445,000 after 14 seasons.

Now 58, Williams has suffered through 24 operations on his right knee, leaving the knee looking like hamburger and that leg 3 inches shorter than his left. "I never played a game where I didn't get hurt," he told me. That includes 14 games in California against the Rams, Raiders, 49ers and Chargers. "Now I wake up every day in extreme pain." Five years ago he had to leave a job with Walt Disney Co. because he could barely stand on his feet.

In 2008, Williams filed for workers' compensation in California, but the Bengals have blocked that claim, for now, arguing that under his employment contract he was required to file in Ohio. If the team wins, he may be out of luck, for the statute of limitations on Ohio workers' comp claims has long passed, and the state doesn't cover cumulative trauma.

"The NFL doesn't want to be liable for any of this," says Williams' lawyer, Owens. He points out that taxpayers bear the ultimate cost if the leagues skate on their obligations. "If the players can't get workers' comp benefits and they can't get health insurance, they end up on Social Security disability and Medicare," Owens said.

Why California legislators should bend over backward to help out franchise-owning plutocrats is a mystery. That's especially true since the reason athletes have to resort to workers' comp in the first place is that the owners have abdicated their responsibility to care for the injured players who have made them rich. Sure, they'll pay lip service to player health, but talk is cheap. It looks even cheaper in light of the NFL's new broadcast contracts, which are worth more than $40 billion over the next decade.

If the leagues want their California problem to go away, that would be easy: reach deals with the players' unions providing lifetime injury coverage superior to what they can get from workers' compensation. That's a very low bar, even when you're trying to clear it while carrying bagfuls of money.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

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Airports big and small may feel effects of federal budget feud

Get ready for longer lines at Los Angeles International Airport, slower delivery of packages and the possible shutdown of small Southern California airport control towers if a resolution isn't reached on federal budget cuts.

The good news is that the biggest effects probably will not take hold until April, giving President Obama and congressional leaders time to hammer out a deal to resolve the budget feud.

But if no agreement is reached, the Federal Aviation Administration will be forced to cut its budget about $600 million. That could force the FAA to close more than 100 air traffic control towers across the country, primarily at smaller regional airports, including in Santa Monica, Victorville and Oxnard.

The night shift for air traffic controllers could also be eliminated at about 70 larger airports, including LA/Ontario International.

The federal agency has also put out the option of furloughing FAA employees for one or two days per two-week pay period, beginning in mid-April.

At Los Angeles International Airport, officials say it is too early to gauge how much of an effect the budget cuts would have on the average air traveler.

But Transportation Security Administration head John Pistole said lines at security gates at major airports across the country could grow longer during the peak spring and summer travel seasons if he is forced to cut overtime pay, which would reduce the number of screening officers.

"The longer it goes, the greater the potential impact," he said of the budget battle.

The National Air Traffic Controllers Assn. expects the cuts to lead to fewer flights and increased delays of as long as 90 minutes during peak hours.

"Safety will remain the top priority, but in order to maintain the appropriate level of safety with fewer controllers, fewer planes will be allowed in the sky, as well as in and out of airports," the group said in a statement.

The FAA has announced plans to shut down towers at airports with fewer than 150,000 landings and takeoffs a year. Santa Monica Airport, which is on the FAA closure list, operates about 105,000 landings and takeoffs a year. Van Nuys Airport, which is not on the list, has more than 250,000 landings and takeoffs.

Still, the effect on smaller airports on the FAA cut list may not be severe because pilots can land and depart without the help of an air traffic controller by keeping track of each other through radio communications.

Joe Justice, who operates Justice Aviation, a company that offers flying lessons at Santa Monica Airport, said he doesn't expect his business to face major changes if the tower is closed.

"We would continue to give flying lessons," he said. "There would be no reason not to. We would depart here and practice at a place where there is an open tower."

Private jet charter companies said they may even get more business if sequestration increases delays on commercial airlines, forcing passengers to charter a jet.

"People who are sitting on the fence about wanting to hire a private jet may spend the extra money so they won't be caught in a situation where they have no idea how long their delays will be," said Ben Schusterman, founder of Los Angeles-based ElJet.

The closure of overnight shifts at the control tower in Ontario could eliminate 12 passenger flights, or 9% of operations, but a bigger effect would be the loss of 73 cargo flights, or 36% of all cargo operations.

Cargo operators at Ontario said they were still unsure of the effect of budget cuts on their businesses.

"UPS is closely monitoring the sequestration proceedings," United Parcel Service Inc. spokesman Mike Mangeot said. "And while we are in communications with the FAA regarding the effects of the possible cuts, it is premature to speculate at this time."

hugo.martin@latimes.com

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Island Air is Ellison's latest buy

How do you follow the purchase of an island in Hawaii?

If you're Oracle Chief Executive Larry Ellison, you buy an airline so you can hop to and from your tropical paradise.

Ellison has been on a shopping spree lately, buying 98% of the island of Lanai in June from Los Angeles billionaire David Murdock and then, in November, buying a beachfront Malibu home from film and TV producer Jerry Bruckheimer.

Ellison's most risky acquisition may be Island Air, which he bought Wednesday through a holding company.

The exact purchase prices of Ellison's recent deals have not been disclosed, but local observers value the 141-square-mile island at more than $500 million and the three-bedroom, three-bath Malibu pad at more than $3.65 million. The details of the airline deal were not announced.

Island Air, a regional carrier serving airports on all major Hawaiian islands, has 245 employees and three turboprop planes, with 224 weekly flights between the islands of Oahu, Maui, Molokai, Lanai and Kauai.

Lanai, the sixth-largest Hawaiian island, was once a pineapple plantation and is still sparsely inhabited. It includes two resort hotels and two golf courses with clubhouses, according to Hawaii's Public Utilities Commission.

But Ellison did not buy the airline just to get to and from his island, airline officials say.

He hopes to expand the businesses to serve locals visiting relatives on the islands and to fly mainland and foreign tourists throughout the island state, airline officials said. The airline plans to retire two 1980s-era planes and expand to four or five new ATR 72 turboprops by the end of the year.

But Ellison should not get his hopes up about pocketing big profits, said Ray Neidl, an aviation analyst for Nexa Capital Partners in Washington, D.C.

"It's a high-risk situation with no significant margins, at least initially," he said of owning an airline.

And if Ellison hopes to expand the business, he should expect to get some resistance from the big carrier on the island, Hawaiian Airlines, Neidl added. "It really depends on what Hawaiian does."

Island Air began in 1980 as Princeville Airways, carrying passengers from Kauai to Honolulu. The history of the carrier has not always been blue skies and soft landings.

"In our 30-plus years, we had our ups and downs, pardon the pun," said Michael Rodyniuk, a senior consultant to the airline.

Like most airlines across the country, he said, Island Air struggled during the economic turmoil between 2008 and 2012 but expects to thrive with a surge in tourism that Hawaii has been enjoying in the past year or so.

The state welcomed a record 8 million visitors in 2012, surpassing the previous high of 7.6 million visitors in 2006.

"All major markets are up," Rodyniuk said.

The previous owner of the airline, California businessman Charles Willis IV, had been looking for a buyer for the airline and had put all 245 employees on notice that layoffs could begin as soon as March 11 if a buyer was not found, he said. "So Mr. Ellison saved 245 jobs," Rodyniuk said.

Forbes ranks Ellison as the third-richest American, with a net worth of $36 billion. He has cut big checks in the past on high-priced properties in Malibu, Lake Tahoe, Rancho Mirage and other locations.

But unlike real estate, air carriers are an investment that can give investors nightmares.

Virgin America, a California-based airline partly owned by millionaire Richard Branson, has been operating for more than five years without recording a profitable year.

California Pacific Airlines is the brainchild of Encinitas businessman Ted Vallas, who has already invested more than $6 million of his own money but has spent the last year trying to clear federal red tape so he can begin selling tickets.

And then there are the 11 other airlines — including American, Delta, United and US Airways — that have filed for bankruptcy since 2000.

"The profit margins on airlines, even though they are improving, are not that attractive," Neidl said.

hugo.martin@latimes.com

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Deficit hawks' 'generational theft' argument is a sham

Here's a phrase you can expect to be hearing a lot in the national debate over fiscal policy, as we move past the "sequester," which is today's crisis du jour, and toward the budget cliff/government shutdown deadline looming at the end of March:

"Generational theft."

The core idea the term expresses is that we're spending so much more on our seniors than our children that future generations are being cheated. An important corollary is that the government debt we incur today will come slamming down upon the shoulders of our children and grandchildren.

The generational theft trope has already been receiving a vigorous workout in the press. Earlier this month, the Washington Post gave great play to a study by the Urban Institute stating that the federal government spends $7 on the elderly for every dollar it spends on kids. As we shall see, this is true as far as it goes, but it doesn't go nearly far enough to render an accurate picture of government spending.

The National Journal, another influential publication in Washington, picked up the theme last week by observing that because the sequester exempts Social Security and Medicare from budget cuts, the automatic spending reductions it mandates will fall disproportionately on education and other such boons to the young. This will "deepen the budget's generational imbalance."

This is also a bedrock argument of the anti-deficit organizations, such as Fix the Debt, associated with hedge fund billionaire Peter G. Peterson. For decades he has pursued a wearisome and spectacularly self-interested campaign to cut Social Security and Medicare benefits for the working class so taxes won't go up too much on the wealthy.

One of those organizations, called "The Can Kicks Back," promotes a "Millennial-driven campaign to fix the national debt." But backstopping its twenty- and thirty-something leaders is an advisory board comprising such Peterson frontmen as Morgan Stanley board member Erskine Bowles and former Sen. Alan Simpson (R-Wyo.). These guys are "millennials" only if we're talking about the last millennium before this one.

So here's the truth about the "generational theft" theme: It's wrong on the numbers and wrong on the implications.

Let's start with that 7-to-1 spending ratio on seniors versus children. Among the flaws in the calculation is that the vast majority of government dollars spent on children comes from state and local governments, which pay most of the cost of education. On a per capita basis, state and local spending on kids swamps the federal government's spending 8 to 1.

Moreover, there are twice as many children 18 and under as seniors 65 and over (this 2008 figure also comes from the Urban Institute report). Put the numbers together and you discover that spending by governments at all levels in 2008 came to about $1 trillion on seniors and $936 billion on children. In other words, very close to 1 to 1.

The notion underlying the comparison of spending on seniors and children is that "if you save a dollar on Social Security it would be transferred automatically to children," observes Theodore R. Marmor, an emeritus professor of public policy at Yale and a long-term student of social welfare programs. He traces this notion to deficit hawks and dismisses it as "not naive, but cynical."

That's because most of the spending on seniors is in Social Security and Medicare, and therefore has been largely paid for by those very beneficiaries over the course of their working lives.

Payroll taxes have more than covered what today's average retiree will receive back from Social Security. They won't cover the average payout on Medicare, but that's an artifact of uncontrolled healthcare costs, not of the structure of Medicare itself. Changing the terms of that program, say by raising the eligibility age (currently 65) won't save money and may actually raise costs.

In other ways, treating Social Security and Medicare spending on the one hand and spending on kids on the other as though they're opposite sides of a zero-sum game is just an act of ideological legerdemain aimed at undermining those programs.

If America wants to spend more on children, it's plenty rich enough to do so without eating away at the income of their grandparents. The money can come from the defense budget, farm supports or dozens of other places, even higher income taxes.

Let's not forget, too, that the people who will really suffer from gutting Social Security won't be today's seniors, who will escape the worst of the cutbacks — they'll be today's young people, for whom Social Security would become much less supportive when they retire.

What about the debt load we're supposedly imposing on future generations? This is another transparently Petersonian feat of sleight of hand, based on the assertion that while it's we who incur the debt, it's our children who will have to pay if off.

All the hand-wringing over today's borrowing conveniently assumes that the debt buys nothing, which makes it easier for debt hawks to pretend that it's only an expense and not an investment.

But money borrowed for the stimulus has bought jobs and unemployment benefits, which have helped sustain families through the Great Recession. (At least a few of those families have children, wouldn't you guess?)

In a larger sense, money borrowed by every generation is typically invested in programs and infrastructure — highway, schools, research and conservation, for example — that will add to future generations' wealth.

It's the persistence of the "generational theft" claim, which bubbles up every few years, that exposes its ideological roots.

It's a fundamental piece of a decades-long campaign to distract Americans into thinking that the threat to their way of life comes from a war of old against young, rather than an intra-generational class war in which the vast majority of economic gains from improvements in worker's productivity has flowed to the wealthy, not to the workers.

The economist Dean Baker observes, for example, if the federal hourly minimum wage had merely kept up with productivity growth after 1969 rather than stagnating (and getting eaten away by inflation) it would be more than $16.54, and we wouldn't be arguing about whether the country can "afford" an increase to $9.

The "generational theft" argument is a sham. It's an attempt to get around the fact, so distasteful to the enemies of government social programs, that Social Security and Medicare are hugely popular. As Marmor observes, if you can't put across the case that these programs are undesirable, "you have to make them look uncontrollable, ungovernable, and therefore unaffordable."

The argument has been tried out on several generations in the past, and they've seen through it. Today's generation should see through it too.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

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Bill would bar some athletes from California workers' comp claims

SACRAMENTO — Players for professional sports teams based outside of California would be barred from filing compensation claims for job-related injuries under proposed legislation supported by owners of football, baseball, basketball, hockey and soccer franchises.

A bill unveiled Monday by Assembly Insurance Committee Chairman Henry Perea (D-Fresno) would ban retired athletes from seeking workers' compensation benefits from California courts after they've played relatively few games in California stadiums and arenas during their careers.

The proposal, AB 1309, is expected to be one of the most hotly debated issues of the legislative session, with team owners lining up against the players' unions and their labor allies.

The bill, said Perea, is expected to be a "starting point" for a lively legislative debate over whether claims from out-of-state retired players represent abuse of the California workers' compensation system and wind up hitting all California employers with higher premiums and surcharges that pay for outstanding claims left by failed insurance companies.

"It's a question of fairness," Perea said.

Workers' compensation is 100% employer funded and does not depend on taxpayers' support.

The cost argument is phony, countered Richard Berthelsen, a consulting lawyer with the National Football League Players Assn. A prorated share of a team's workers' compensation bill is calculated into athletes' salary caps, so, in effect, they're paying for their own insurance coverage, Berthelsen contended. "They pay for their own benefits," he said.

Perea's bill would affect professional athletes from only the five big sports and not members of other professions whose work takes them from state to state, such as horse racing jockeys, truck drivers and salesmen. It would bar the filing of claims for cumulative trauma — caused by years of stress and pounding on a body rather than a broken bone or other specific injury — unless a player worked at least 90 days in California during the year prior to seeking benefits.

California is the only state that makes it relatively easy for long-retired players to claim cumulative trauma injuries. About 4,500 out-of-state players have won judgments or settlements since the early 1980s, according to a study commissioned by the professional sports leagues.

The bill, if it should become law, would apply to thousands of out-of-state athletes' claims currently pending before California workers' compensation judges.

Perea's legislation, by restricting benefits only for professional athletes, is potentially unfair, labor officials argued.

Regardless of whether they play for out-of-state teams, said Angie Wei, legislative director of the California Labor Federation, "these players are workers and they deserve to have access to their benefits. They work for short durations of time at an intense level and get injured."

marc.lifsher@latimes.com

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Jason Bateman gives Ernest Borgnine's estate a new identity

Markus Canter and Cristie St. James, who share the title luxury properties director at Prudential in Beverly Hills, like Jason Bateman's real estate sense. The actor got privacy, potential and a knoll location for $3 million.

Actor Jason Bateman and his wife, actress Amanda Anka, are dropping anchor in the Beverly Crest area with the purchase of the estate of Ernest Borgnine for $3 million.

The gated country English compound sits on a half-acre knoll. The 6,148-square-foot home features a formal entry hall, a grand staircase, a paneled library, an office, a den, six bedrooms and seven bathrooms. There is a guesthouse and a swimming pool.

Bateman, 44, stars in the comic film "Identity Thief," released this month. He is known to generations of TV viewers for his roles in "Arrested Development" (2003-present) and "Valerie," later retitled "The Hogan Family" (1986-91). Anka, 44, has appeared in "Bones" (2008), "Notes From the Underbelly" (2007) and "Beverly Hills, 90210" (1996).

Borgnine, who died last year at 95, is remembered for his Oscar-winning performance in "Marty" (1955) and his work in the title role as commander of a madcap crew in the sitcom "McHale's Navy" (1962-65). Until 2011 he was the voice of Mermaidman on "SpongeBob SquarePants."

The estate came on the market in October for the first time in 60 years priced at $3.395 million.

Billy Rose, Paul Lester and Aileen Comora of the Agency in Beverly Hills were the listing agents. Richard Ehrlich of Westside Estate Agency represented the buyers.

Where pair spent days of their lives

Soap star Peter Reckell and his wife, singer Kelly Moneymaker, have sold their custom-built, eco-friendly home in Brentwood for $3.35 million.

Before building the 3,345-square-foot house, the couple had the existing home on the site torn down, crated and shipped to Mexico for reuse by Habitat for Humanity. Then they designed and built a three-bedroom, four-bathroom contemporary that uses solar power.

Green elements include a photovoltaic system with battery backup, skylights, recycled glass terrazzo floors with radiant heating, recycled denim and organic cotton insulation, bamboo cabinets and doors, a roof garden and a water reclamation system.

A temperature-controlled wine cave and a recording studio are among other features.

Along with an indoor/outdoor koi pond, a meditation fountain and a solar infinity pool, outdoor amenities include a 16th century East Indian temple that was turned into a pavilion.

"This is my sanctuary," Reckell said. It frames views of the Santa Monica Mountains Conservancy.

Reckell, 57, played Bo Brady on "Days of Our Lives" from 1983 through last year. The show began in 1965. He also appeared in "Knots Landing" (1988-89). He is an avid environmentalist and bikes to work.

Moneymaker, 42, is a former member of the music group Exposé. She was inspired to build an environmentally friendly home because the carpet and other elements in the old house bothered her allergies and affected her voice.

Public records show they bought the property in 2003 for $1.14 million.

Daniel Banchik of Prudential's West Hollywood office was the listing agent. Scott Segall of John Aaroe Group represented the buyer.

Another rock owner for home

Hard Rock Cafe co-founder Peter Morton has made his mark on L.A.'s real estate scene of late, buying the old Elvis Presley estate in Beverly Hills at year-end for $9.8 million.

But flying under the radar was his bigger off-market purchase midyear for a property in Bel-Air at $25 million, public records show. Area real estate agents not involved in the transaction say Morton plans to take down the existing home and build another on the site. The estate had belonged to Joseph Farrell, who founded National Research Group Inc. in 1978 and brought market testing to Hollywood. Farrell died in December 2011.

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Hiltzik: Herbalife's academic team

Herbalife International says it's all about helping people "pursue healthy, active lives." UCLA's Geffen School of Medicine likes to think of itself as being in the forefront of medical research and modern healthcare.

But the curious relationship between these two supposed champions of healthful living should turn your stomach.

Herbalife is the Los Angeles nutritional supplement firm that has become the centerpiece of a ferocious Wall Street tug of war. The major player is hedge fund manager Bill Ackman, who contends that Herbalife is a scam to sell overpriced products by fooling people into becoming Herbalife "distributors" by implying the business will make them rich. He says he's shorted $1 billion in Herbalife shares as a bet that the company is destined to collapse. On the other side are investors who either believe Herbalife will stay a highflier, or who just want to squeeze Ackman dry. (He's not a popular chap.)

One of Ackman's accusations against the company is that it exaggerates the scientific research behind its powders and pills. That's where UCLA comes in, because Herbalife has exploited its "strong affiliation" with the medical school to give its products scientific credibility.

Those words were uttered by Herbalife CEO Michael Johnson during a 2007 conference call. In fact, Johnson seldom lets an investor event pass without mentioning UCLA, specifically the Mark Hughes Cellular and Molecular Nutrition Lab at the medical school's Center for Human Nutrition. Herbalife says it has contributed $1.5 million in cash, equipment and software to the lab since 2002. (The lab is named after Herbalife's founder, who died in 2000 after a four-day drinking binge — not the greatest advertisement for healthful, active living.)

That's not much of an investment for a company that collected $2 billion in profits over the same period. But Johnson sometimes refers to the lab as if it's an Herbalife facility. "Our product development stems out of our own research and development labs," he told an investor conference in 2008. "It comes from UCLA where we have the Mark Hughes Cellular Lab there."

Nor does Johnson shrink from the admission of what he hopes to gain from the UCLA connection. In 2007, explaining how he inculcates Herbalife's distributors with respect for the firm's protein powders and other supplements, he said: "We bring these great minds from UCLA to join us, to give them confidence in these products."

That brings us to Herbalife's prime UCLA trophies, David Heber and Louis Ignarro.

Heber is director of the Center for Human Nutrition and a professor at the medical school. He's a well-known obesity specialist with hundreds of scientific articles and four popular diet books to his name. He's also chairman of Herbalife's "Nutrition Advisory Board," a collection of credentialed experts who supposedly meet once a year and sometimes make appearances at Herbalife events. Ignarro and two other UCLA medical school faculty members, dermatologist Jenny Kim and psychiatrist and aging specialist Gary Small, are also on the board. (None replied to my requests for comment.)

The board members traditionally have been paid as much as $60,000 annually, plus a per diem of up to $3,000 for event appearances. (This year, the company said it cut them back to $20,000 a year and $1,500 per diem).

Heber has a special deal, however. A firm he's "affiliated with" collects an annual payment of $300,000 from Herbalife, according to Herbalife disclosures. He also received Herbalife stock grants in 2005, 2010, 2011 and 2012. Herbalife refuses to say how much those grants were worth, and Heber refused to talk with me.

What was he paid for? According to a company spokesman, "for the use and promotion of the nutritional philosophies, theories and concepts contained in his bestselling books," as well as to lend luster to the company's products. In a 2009 promotional video, Johnson introduced Heber as a UCLA faculty member and as "a good friend, a pal and a mentor of Herbalife in all things nutrition." Together they bemoaned the nutritional catastrophe of fast-food burger and fries and offered up an Herbalife protein shake as though it's the only sensible alternative.

Ignarro is an even bigger catch. A professor at the medical school's department of pharmacology, he shared the 1998 Nobel Prize in physiology or medicine for work on the role of nitric oxide in cardiac health. Herbalife soon put him on its payroll. Since 2003, according to corporate disclosures, it has paid a consulting firm connected to Ignarro a total of $17.8 million.

The money principally covers royalties on the sale of an Herbalife product called Niteworks, the label of which carries Ignarro's signature and explicit endorsement. Niteworks, which Herbalife says is "based on" Ignarro's research, chiefly comprises the amino acids L-argenine and L-citrulline, which supposedly generate nitric oxide in the body. There's no evidence that the formulation has ever been subjected to clinical trials to determine its safety and efficacy for humans, and under a 1994 law it doesn't have to be — as a nutritional supplement, it's exempt from Food and Drug Administration oversight of the sort applied to pharmaceuticals.

Ignarro's connection with Herbalife hasn't been free of embarrassment: In 2003 and 2004 he co-wrote two academic articles about the positive affect of nitric oxide on mice, without disclosing his role with the marketing of Niteworks or his connection to Herbalife. The journal that published both papers had to run corrections making the appropriate disclosures. He later apologized, saying that his Italian co-authors "inadvertently failed" to make the disclosures and asserting that he did not act improperly. He didn't respond to my request for an interview.

Herbalife relentlessly promotes its Ignarro connection. At distributor events he's treated like a rock star, telling packed, cheering audiences how great Niteworks is — "It's magical in that it works!" He can be seen in an Herbalife video talking about this "refreshing lemon-flavored product" that "enhances the body's natural nitric oxide production while you sleep." If you look fast, you'll see a disclaimer flash on the screen warning that these statements "have not been evaluated by the Food and Drug Administration" and that Niteworks "is not intended to diagnose, treat, cure or prevent any disease."

That's a clue to how Heber and Ignarro can make grandiose claims for Herbalife products with impunity: That same 1994 law allows nutritional supplement marketers like Herbalife to say almost anything about their nostrums, as long as they flash that pro-forma disclaimer.

It's hard to blame Herbalife for seeking credibility by throwing money at college professors; marketing 101 tells us that even an implicit university endorsement can sprinkle pixie dust over the meanest product. Throw in a Nobel Prize, and you're golden. Nor is Herbalife the only firm to dig its talons into the medical school's Center for Human Nutrition. In one of his books Heber mentions that the center's donors have included Lynda and Stewart Resnick, whose Roll Global markets Fiji Water, Pom Wonderful pomegranate juice and Wonderful Pistachios.

So you may not be surprised to learn that in 2008 Heber was appointed to the firm's Pistachio Health Scientific Advisory Board. Or that he was co-author of a 2012 scientific paper finding that pistachios are a more healthful snack than pretzels. Or that when Pom got in trouble with the Federal Trade Commission for making inflated health claims for its pomegranate juice, he was a leading expert witness for the defense. (The FTC found the firm's ads deceptive anyway.)

Heber, Ignarro and their colleagues certainly have some sound medical and nutritional ideas to offer, but they've made it impossible to know where the sensible ideas end and the shilling for Herbalife begins. Herbalife maintains that it employs its UCLA cadre "as individuals, not in their capacities as UCLA employees or representatives." But that's baloney of an especially non-nutritious variety: Most of them are on the Herbalife payroll because of their UCLA connection.

That's a serious issue for the medical school. At what point does it lose its reputation as a source of objective scientific knowledge, and become instead an arm of Herbalife's (or the Resnicks') P.R. machine? At what point does it begin to look like a university for sale?

When torrents of cash fall upon people like Heber and Ignarro — especially when the payments promote interests fundamentally in conflict with their responsibilities for thorough, objective research — it's proper to ask whether the recipients should be viewed primarily as university professors with an income source on the side, or as agents of industry exploiting their academic titles for show.

The University of California has a "conflict-of-commitment" policy governing the outside activities of its faculty members, but it may be too tolerant. The policy frowns on outside salaried work without written permission, but it provides a yawning loophole for arrangements like consultantships. Faculty are required to maintain "appropriate standards of scholarly inquiry" and to practice "intellectual honesty."

The policy is silent on how those standards might be affected by outside income of $300,000 a year, much less $17.8 million over a decade.

UCLA plainly hasn't done enough to make sure that its faculty aren't trading on its name in ways that devalue that name. But Herbalife may not be gaining as much as it thinks, either. Examine this relationship closely enough, and when you ask yourself whose claims for the healthfulness of these products you should believe, Herbalife's or the professors', you may find that the only safe answer is: nobody's.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

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Foreign tourists' spending in U.S. rises to new record

The U.S. continues to be a hot destination for big-spending tourists, setting a new record of $168.1 billion in foreign visitor spending in 2012.

The country last year welcomed 66 million foreign visitors, whose spending represents a 10% increase over 2011, said Rebecca Blank, deputy secretary of the U.S. Department of Commerce.

The greatest increase in visitors and spending came from countries with a burgeoning middle class, including China, Brazil and India.

Spending by foreign tourists has been on the rise for the last three years, with tourist hubs such as Los Angeles, Las Vegas, New York and San Francisco reaping much of the spending, Blank said.

"The coasts that are close to Asia and South America will see the notable effects," she said.

The federal government and the tourism industry have been paying special attention to foreign overseas tourists because they typically stay longer and spend more than visitors from Mexico or Canada.

Long-haul foreign visitors spend an average of $4,000 per visit, while visitors from Mexico and Canada — although they represent the greatest number of foreign tourists — spend less than $1,000 per visit, according to federal reports.

Visitor numbers from Europe — once the source of most of the U.S. tourism spending — have been dropping in recent years, as Europeans struggle with economic hardships. But the U.S. Department of Commerce predicts continued growth in tourists from Brazil (274% by 2016), China (135%) and India (50%).

To promote more foreign visitors, the Obama administration and leaders of the travel industry launched in 2011 a public-private partnership to promote the U.S. in foreign countries. The campaign, known as Brand USA, is funded by fees charged to visitors applying for visas and contributions from private firms.

The administration has also pushed the Department of State and the Department of Homeland Security to shorten the wait time for visa interviews and expanded a program to speed low-risk visitors through expedited security lines at major airports.

The number of international visitors rose to 62.3 million in 2011, up from 59.7 million in 2010, according to the Department of Commerce. President Obama has set a goal of welcoming 100 million foreign visitors by 2021.

"Our projection is that the travel and tourism industries are going to create over 1 million jobs in the next decade," Blank said.

hugo.martin@latimes.com

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Tesla results renew worries about its long-term viability

Tesla Motors Inc. reported another good-not-great quarter, renewing concerns about its ability to quickly churn out enough electric vehicles to sustain the company for the long term.

The company plans to ramp up the introduction of Tesla Model S cars to consumers worldwide, saying it was "on a journey" this year to expand the line and turn profitable, Chairman Elon Musk and Chief Financial Officer Deepak Ahuja wrote in a letter to shareholders Wednesday.

"Our intention is not to make customers wait six months for a car," Musk said in a call with analysts. "Our focus in Q1 is on production efficiency, improving gross margin and making sure customers are really happy when they receive the car. It's important for us to operate at that steady state for a bit before we try to drive that number higher."

This year, Tesla plans to deliver about 20,000 Model S units, with about 4,500 deliveries expected in the current quarter. The Palo Alto company projected that it would "generate slightly positive net income" in the quarter. That was welcome news to analysts, who have been looking for the company to become more financially stable.

"There have been other electric vehicle car companies that have had numerous problems. So if I compare it to that, they're leaps and bounds ahead," said Ben Kallo, senior research analyst at Robert W. Baird & Co. "Now they have to prove the details around the business model."

On-time delivery of those Model S cars — which sell for $61,000 to more than $100,000 — will be key to the survival of future Tesla products, which have been hampered by delays. The company initially planned to start building the Model X crossover SUV by the end of 2013, but now says production will start in 2014. The X will share its platform and many of its components with the Model S.

Down the line, Tesla hopes to build a more affordable car, which it will need to sell in quantities greater than the S and X to ensure long-term viability.

Regardless of when and how Tesla expands its offerings, the company faces long odds in making a dent in the sales of gas and diesel vehicles. Electric vehicles accounted for just 0.1% of U.S. sales in 2012, and that number is expected to rise to only 2% by 2020.

Many consumers remain wary of a vehicle with a perceived finite range. The cost of the batteries and related technologies in EVs also makes it difficult to price them competitively with comparable gas-powered vehicles.

Tesla found itself dealing with the issue of electric vehicle range in a recent public dispute with the New York Times.

After reporter John Broder detailed problems with the car's range on a trip from Washington, D.C., to Connecticut, Tesla's stock dropped. Musk went on the offensive, calling the article "fake" and railing against the piece in several television appearances. He then released data logs from Broder's test car, saying they backed up his claims.

The Times initially responded by saying the article was "completely factual," and Broder wrote a follow-up piece defending his initial assertions. The Times' public editor, Margaret Sullivan, eventually waded into the controversy with a blog post that offered measured criticism of Broder but defended his motives.

For the three months ended Dec. 31, Tesla reported revenue of $306 million, beating expectations. But it posted a larger-than-expected loss — $90 million, or 79 cents a share.

In the year-earlier quarter, Tesla reported revenue of $39.4 million and a loss of $81.5 million, or 78 cents a share.

Excluding one-time charges, the company posted a fourth-quarter loss of $75 million, or 65 cents; analysts had expected a loss of 53 cents a share.

Tesla said it delivered about 2,400 Model S vehicles during the fourth quarter and sold most of its remaining Roadsters. It ended the year with more than $221 million in cash.

Shares fell 7.3%, or $2.80, to $35.74 in after-hours trading. During regular trading before earnings were released, shares declined 1.9% to $38.54.

Wednesday's release was the first detailed look at Tesla's finances since September. At that time, production delays had forced the company to downgrade its projected 2012 revenue to no more than $440 million, compared with previous estimates of up to $600 million.

Tesla had built just 255 Model S cars at that point, though it hoped to build 10 times that by the end of 2012. The company confirmed in Wednesday's report that it had indeed built 2,750 cars in the fourth quarter.

The company said Wednesday it has more than 15,000 fully refundable deposits on hand.

Now it just needs to deliver the cars.

andrea.chang@latimes.com

david.undercoffler@latimes.com

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Anthem halts plan to require some drug purchases by mail

Anthem Blue Cross is backing off a decision to require some policyholders to buy their prescription drugs from a single mail-order pharmacy — a requirement that the California attorney general's office said may be illegal.

Anthem, California's largest for-profit health insurer, said in November that it was imposing the new rule for so-called specialty medications used to treat major illnesses, such as cancer and HIV/AIDS. The company said the limitation would help keep costs down for patients and businesses.

That may indeed be true. But as I reported last month, California's Unruh Civil Rights Act (Section 51 of the Civil Code) specifies that all people must be treated equally "no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status or sexual orientation."

In response, California Atty. Gen. Kamala D. Harris said that any rule that forces some people to buy their meds from one drugstore but allows others to shop elsewhere could violate the law.

"California law clearly states that no one can be discriminated against because of a medical condition," said Lynda Gledhill, a spokeswoman for Harris. "If patients are being required to get their prescriptions from a certain pharmacy because of their condition, that is likely illegal."

Anthem is now notifying people who take specialty medications that it won't require them to buy their drugs from the online pharmacy CuraScript starting March 1, as originally planned.

"Because Anthem has received feedback about this specialty pharmacy program from its members, we are evaluating that input to better serve our members and, for the time being, have eliminated the stated March 1, 2013, required date to use CuraScript for such additional specialty medications," the insurer said in its letter.

Darrel Ng, an Anthem spokesman, said the insurer believes the new requirement is legal. He said the company is only postponing the rule, rather than abandoning it.

"In response to feedback that has been conveyed by our members, which we are in the process of evaluating, we are delaying the March 1 changes in the specialty pharmacy program," Ng said. "We value the input of our members."

He declined to say when Anthem may again try to implement the requirement.

David Balto, former policy director for the Federal Trade Commission, said Anthem will have to make significant changes if it hopes to avoid legal action by Harris' office.

"They recognized that the policy violated the law," he said. "Consumers and pharmacies drew a line in the sand, and Anthem backed down."

Balto, who now works as a Washington antitrust attorney, was retained by retail drugstores to challenge the specialty-med requirement.

Anthem also faces a class-action lawsuit filed by the Santa Monica advocacy group Consumer Watchdog. It alleges that the insurer's policy switch would endanger people with HIV/AIDS by denying them the opportunity to interact with a pharmacist about their medication.

"Blue Cross' announcement is a big relief to HIV/AIDS patients who had a gun to their head to cut off contact with their local pharmacist," said Jerry Flanagan, staff attorney for Consumer Watchdog.

Sections 54 and 55 of the Civil Code state that people with disabilities or medical conditions "have the same right as the general public to the full and free use of the streets, highways, sidewalks, walkways, public buildings [and] medical facilities, including hospitals, clinics and physicians' offices."

Section 12926.1 of the California Government Code specifies that "physical and mental disabilities include, but are not limited to, chronic or episodic conditions such as HIV/AIDS, hepatitis, epilepsy, seizure disorder, diabetes, clinical depression, bipolar disorder, multiple sclerosis and heart disease."

In its first notices to people using specialty meds, Anthem said that "using a retail pharmacy will be considered going out-of-network."

It warned such people that the only way to receive coverage for their drugs would be to shop at CuraScript. Buying medication elsewhere would require them to pay the full cost, Anthem said.

The price of specialty medications can run in the thousands of dollars. Anthem's requirement thus would have forced a specific group of people to buy their drugs at the pharmacy of Anthem's choosing.

Other people with chronic conditions such as diabetes faced no such requirement. It was this seemingly inconsistent approach to drug coverage that raised a red flag for the attorney general's office.

Experts said Anthem was correct in arguing that prices for specialty meds can be better controlled by cutting deals with a single pharmacy. But this placed the interests of the insurer and the pharmacy ahead of those of the patient.

A more equitable solution may be for Anthem to allow people to buy their drugs anywhere, but to offer a discount for drugs purchased from CuraScript. This would provide an opt-out of the CuraScript requirement.

This may not provide as much cost savings as limiting all coverage to CuraScript, but it would likely make the attorney general a whole lot happier.

David Lazarus' column usually runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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Consumers need better way to fix credit reporting errors

About 10 million consumers, through no fault of their own, have serious errors on their credit reports, raising troubling questions about people's ability to secure loans and the fairness of interest rates they're charged.

In the first study of its kind, the Federal Trade Commission looked at credit reports for 1,001 consumers obtained from the three major credit bureaus — Experian, Equifax and TransUnion.

It found that about a quarter of consumers had at least one "potentially material" error in at least one of the three reports. Such errors included the number of credit-card or mortgage payments a consumer was believed to have missed or the number of loans that were sent to collection agencies.

"We're talking about folks who could have gone into a better credit tier if these errors had been corrected," Paul Pautler, deputy director of the FTC's Bureau of Economics, told me.

These findings are outrageous enough. But they also highlight the shadowy nature of the credit reporting industry, a business with the power to make or break your creditworthiness without ever being required to obtain your permission to compile and sell files on your financial affairs.

And in the digital age, with thousands of corporate databases up for grabs, it's become all too easy for these companies to traffic in garbage information. Again, all without your approval.

"It's unconscionable that 40 million Americans have errors in their credit reports and that 10 million have errors grave enough to cause them to be denied or charged more for credit or insurance or even be denied a job," said Chi Chi Wu, staff attorney at the National Consumer Law Center.

"There needs to be serious and wholesale reform of the credit reporting industry," he said.

Will there be? I put that question to Pautler.

"That's above my pay grade," he replied.

I'm guessing the more than $2 million that Experian, Equifax and TransUnion spent on lobbying last year alone will have some sway over any crackdown on the industry. Political expenditures by the companies were compiled by the Center for Responsive Politics, a watchdog group.

Meantime, people like Deborah Carter of Huntington Beach will continue banging their heads against the credit reporting industry.

When her son recently received an unexpectedly high interest rate to refinance his mortgage, Carter, 58, delved into his credit files and discovered that both Equifax and Experian had lowered his credit score because of seemingly missed payments.

She said Equifax's files showed "recent delinquencies reported on accounts." Experian cited "too many delinquent accounts."

In fact, Carter said, her son had only one missed payment on a single loan six years ago. Yet when she tried to clear things up with Equifax and Experian, she got nowhere. Similarly, complaining to the FTC only produced an acknowledgment of her dispute.

"I've done everything I'm supposed to do as a consumer," Carter said, "and my son has the same credit score and the same inaccurate information."

So how did the credit reporting industry gain so much clout? To understand that, you have to go all the way back to 1898.

That's when a Tennessee grocer named Cator Woolford oversaw creation of a list of customers, including indications of their creditworthiness, for a local grocers' association. It didn't take long for other merchants to express interest in buying the list, and Woolford soon went into the credit reporting business full time.

By 1901, Woolford's Retail Credit Co. was also supplying data to the insurance industry. The company continued to grow over the years and to acquire rival businesses. In 1979, it changed its name to what we know today as Equifax.

TransUnion was born in 1968 as the holding company for Union Tank Car Co., which leased rail cars to other businesses. The company got into the credit reporting game a year later by acquiring the Credit Bureau of Cook County in Chicago, followed by the acquisition of other local credit bureaus nationwide.

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A secret agent reveals her secrets of success

The prospect of a business book written by a former CIA officer fills one with dread at the inevitable 007 anecdotes and labored corporate parallels.

But "Work Like a Spy: Business Tips From a Former CIA Officer," published by Portfolio, turns out to be rather different. There are no gadgets, few cloaks and fewer daggers: Instead it is a bracingly realistic book about people at work. It is short. It is sharp. Better still, it is sensible.

It is also about spying, though only enough to lend a sprinkle of glamour and danger. The book jacket photo shows author J.C. Carleson, an undercover agent for eight years, looking like a real-life Carrie from "Homeland" — without the blond hair and the bipolar disorder.

Yet her stories from the field are as much blunder as conspiracy. The book opens with the heroine as a young case officer in an armed convoy in Iraq. It is 2003 and she is going to inspect a plant that the U.S. is convinced makes biological weapons. They disarm the guards and terrify everyone — only to discover it is a salt factory.

"Salt. (Insert your own expletive of choice here.) Salt!" she writes.

Carleson assures us that not all CIA work is suitable for general adoption: The threatening, lying, trapping, cheating, misleading and detaining that go with the territory should not be tried in the office.

But the spy can teach the general manager about human nature. Spies are simply better at observing people because they have spent more time practicing and because the stakes are too high to screw it up.

By comparison, the rest of us are pretty hopeless, only we don't know it. Reluctantly, I have started to reappraise my own view of myself as a brilliant judge of character and admit that such a belief is a liability.

I've just tried the following exercise: Pick a stranger and try to guess their education, profession, religion, income bracket, marital status and hobbies. Disaster: I was wrong on every score.

Because we cling to this idea that our gut instincts are reliable, we make a lot of avoidable mistakes. We make bad hiring decisions. We talk vaguely about wanting passion and creativity rather than setting to work corroborating resumes and seeking out references. Employers should make a short, precise list of the traits a job requires and hire to fill it. It is all obvious. Yet it takes a spy to point it out.

Less obvious but no less valuable is her tip for job candidates: Get the interviewer to do most of the talking and then hang on their every word. Since hardly anyone can resist talking about themselves to a rapt audience, a job offer is almost bound to follow.

To the public speaker and the salesman, Carleson has further good advice: Never rely on a script and never learn what you are going to say by heart. When you do this you use a different tone of voice, go on to autopilot and all trust is lost in an instant. Carleson is right. I have done this, but never again.

I also liked the observation about newly minted CIA officers (for which read new Harvard MBAs and so on) who emerge from the yearlong training process all swagger and irritating charm. This doesn't wash in the agency, any more than it does elsewhere. More seasoned colleagues slap them down. "Don't try to case officer me," they say.

Not everything from the book can be copied. The CIA keeps its best staff by doing sensible things such as moving people around, giving them interesting work and letting lone wolves be lone wolves.

Yet the perks of being an undercover agent also involve wearing disguises, learning how to crash cars and jump out of aircraft — all of which are big pluses, but not terribly transferable.

The main lesson from "Work Like a Spy" is that we are much more likely to get what we want if we watch other people carefully. It helps to identify the other person's weaknesses, and for this there are some common denominators: "… ego, money, ego, ego … ego, ego, ego."

Lucy Kellaway is a columnist for the Financial Times of London, in which this review first appeared.

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G-20 seeks to allay fear of currency war

WASHINGTON — Top finance officials of the world's 20 largest economies sought Saturday to allay fear of a currency war, pledging not to target exchange rates to gain a competitive advantage in trade.

But the joint statement, issued at the end of a meeting in Moscow of the so-called Group of 20, or G-20, did not single out any country, essentially giving a pass to Japan to keep pursuing its economic policies despite a significant slide in the value of the yen since November.

Japan's new government under Prime Minister Shinzo Abe, who will meet with President Obama this week in Washington, had been talking down the yen and has pressed its central bank for more expansive monetary stimulus to break out of its deflationary trap and boost the nation's stagnant economy. A cheaper currency helps a country's exporters sell their goods to foreign markets.

Some analysts said they now expect the yen to dip further, a prospect that could stoke contention over exchange rates and present complications for the United States in its long-running efforts to influence China to make more rapid adjustments in its currency.

"The U.S. could tolerate the yen depreciation, but clearly this is a potential problem in so far as China could interpret it as a possible green light to make its currency weaker," said Domenico Lombardi, a senior scholar at the Brookings Institution in Washington.

American officials were careful not to fault Japan, an important ally in Asia. What's more, the Federal Reserve also has taken extraordinary measures to stimulate its domestic economy, for which the U.S. has come under similar accusations from some G-20 nations that it was aiming to cheapen the dollar to boost exports.

Federal Reserve Chairman Ben S. Bernanke, in remarks Friday at a G-20 session with finance ministers and central bankers, said the United States was simply "using domestic policy tools to advance domestic objectives."

The Fed has been aggressively buying Treasury bonds with the aim of pushing down long-term interest rates to stimulate investment and reduce the unemployment rate, but that has contributed to a weakening of the dollar.

Many economists believe that currency manipulation occurs when a government intervenes, for example, by buying up dollars, specifically to devalue its currency. This, they say, is different from what may be an unintended byproduct of large-scale monetary stimulus to support one's domestic economy.

Intended or not, other analysts said the distinction was not so clear when the result was the same.

Aiming to make that more clear, the G-20 statement said monetary policies should be directed at price stability and domestic growth. "We will refrain from competitive devaluation," it said.

The statement said the G-20 would "monitor and minimize the negative spillovers on other countries of policies implemented for domestic purposes," but it did not set any benchmarks or enforcement mechanism.

A weaker Japanese yen isn't likely to have a major effect on the U.S. economy, and certainly not any time soon. American officials are far more interested in the politically sensitive issue of the Chinese currency. Although the Chinese yuan has risen significantly against the dollar in recent years, many in the U.S. still consider it undervalued and harmful to American exporters.

Besides currency fluctuations, G-20 finance officials also took up budget austerity. The Eurozone's debt crisis and deepening recession have prompted some in Europe to rethink the idea of setting tough budget deficit targets.

The Obama administration, fighting at home to avert stringent fiscal cuts that it believes could hurt the nation's economic recovery, has long pressed the G-20 to put more emphasis on pro-growth policies and less on austerity. But Germany and some others have insisted on fiscal consolidation and debt reduction as key pathways to recovery.

A debt-cutting agreement forged at the G-20 in Toronto in 2010 will expire this year, and officials at the Moscow meeting made no announcement on the issue.

Reflecting a reduced sense of urgency as the Eurozone's troubles have eased somewhat and the global outlook has moderately improved, the joint statement noted that risks to the world economy had receded.

Still, it said, growth remains too weak and unemployment too high:

"A sustained effort is required to continue building a stronger economic and monetary union in the euro area and to resolve uncertainties related to the fiscal situation in the United States and Japan, as well as to boost domestic sources of growth in surplus economies."

The G-20 represents the largest industrialized and developing nations, with about 90% of the world's economic output. It was designated in 2009 as the primary international forum for world leaders to address global financial issues and coordinate economic policies.

The finance ministers' gathering, which ended Saturday, was the first with Russia's President Vladimir Putin as this year's chairman of the G-20. Additional sessions are scheduled in the spring and summer before Obama and other heads of G-20 economies meet in September in St. Petersburg, Russia.

don.lee@latimes.com

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Pen collectors going strong even as handwriting dwindles

The discussion over minute details at a Manhattan Beach hotel ballroom seemed endless: Is the ink chamber filled with a pump, a button or an eyedropper? Was the pen exposed to heat or humidity, which darkens its color and decreases its value?

For the 25th year, the Los Angeles International Pen Show convened Thursday, with about 1,200 exhibitors and collectors expected to gather at the local Marriott hotel.

On Sunday, the last day, the show opens to the public for $7 at the door. The pens, though, cost significantly more, starting a little below $100 and breaking seven figures on the high end.

At those prices, it's easy to see the focus on details. But show organizer Chris Odgers, whose day job is as a vice president licensing content for Warner Bros. Pictures, noted that pen culture is about more than the minute details.

"People that do this are about preserving and telling some history," Odgers said.

Pen lovers honor craftsmanship and a personal touch, even as communication moves to keyboards and touch screens, he said. They keep journals and write letters. Many emphasize penmanship and mourn the loss of cursive writing education in schools.

Nationwide, the focus on penmanship has fallen. Annual shipments in the pen and mechanical pencil industry fell 36% from 2002 to 2007, according to U.S. census data.

However, the collecting culture has thrived, thanks to a group of doctors, lawyers, artists and architects who still like the way a nib, or fountain pen tip, makes their handwriting look.

By day, lawyer Cliff Harrington represents large media companies before the Federal Communications Commission in the nation's capital.

But every so often he dons a drab button-down and plants himself behind a folding table at the dozen pen shows he attends each year.

"I've been coming here for 20 years," Harrington said. "The pens are always very interesting here."

For some, pens are also good business. Fred Krinke's Monrovia store, the Fountain Pen Shop, has been in the family since his grandfather opened it in downtown Los Angeles 91 years ago.

Krinke, who has attended the show every year since it began, helps promote the event because the conventions are an important way to create new collectors and keep his business strong, especially as interest in handwriting declines.

"The more people that come, the better it is for us," Krinke said.

Some collectors obsess over pens from a certain company or time period. Others crave custom-made caps and inkwells. And some simply covet pens that are, say, blue.

Rita Lott, 49, of Dakota Dunes, S.D., inadvertently launched her husband's pen collection when she bought him a fountain pen as a wedding gift 20 years ago. Robert Lott, also 49, now owns about 500 pens. On Thursday he added two more: two 14-carat gold Waterman Taper Cap fountain pens, together valued at more than $20,000.

"Was I looking for them? No," said Robert, a retired Army lieutenant colonel. "But when a pen like that surfaces, you just have to step up and do it because you love it."

Although her husband has amassed "a sickening amount" of pens, Rita said, she appreciates that going to the conventions gives her the opportunity to travel.

"We've met a lot of friends, and it's something we've been able to share," she said as her husband peered through bulky jeweler's goggles to check a pen for cracks and blemishes.

A few tables down, Bob Novak, 61, of New York spread out his wares and eyed the competition. He's part of a cadre of dealers who crisscross the country attending pen shows, buying pens the way investors buy stocks.

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Carl Icahn buys nearly 13% stake in Herbalife as battle heats up

NEW YORK — It's no longer just a war of words.

Corporate raider Carl Icahn has thrown $214 million behind Herbalife Ltd., the Los Angeles-based maker of health foods and nutritional supplements accused of being a pyramid scheme by Icahn's foe, fellow Wall Street tycoon Bill Ackman.

Documents filed with the Securities and Exchange Commission on Thursday reveal that Icahn purchased more than 14 million shares and options in Herbalife, a nearly 13% stake that would make him the company's second-largest investor. Icahn said he would pursue talks with executives about possibly recapitalizing the company or even taking it private.

Icahn and Ackman have been engaged in a rare public battle for the last month, hurling insults at each other about past dealings and their respective positions in Herbalife. The two foes have bad blood stemming from a business dispute.

Ackman launched his assault on the company Dec. 20 by unveiling a $1-billion short position, or bet, against Herbalife. That same day, Icahn began snapping up the company's stock, according to the SEC filing.

"It's pretty obvious Icahn really wants to turn the screws on Ackman," said Chris Stuart, chief executive of Shortzilla, a Boston-area research firm. "He's put his money where his mouth is, for sure."

Investors saw Icahn's disclosure as reassuring that Herbalife was not going to collapse, as Ackman has predicted. Its shares surged more than 24% in after-hours trading after closing up $1.87, or 5.1%, at $38.27 on Thursday.

"I think he is definitely trying to hammer his good buddy Ackman, but he could also make a lot of money in this," said Timothy Ramey, an analyst with D.A. Davidson & Co. "It's an undervalued stock."

Ackman, who heads the hedge fund Pershing Square Capital Management, says that Herbalife defrauds its low-income distributors. His wager against the company pays off if its stock falls.

Herbalife hit back by saying the hedge fund manager was misinformed about the company and made an irresponsible bet with his investors' money. The company pointed to its 32 years in business as evidence that it is not a pyramid scheme.

Icahn sees Herbalife as undervalued and believes that the company has a "legitimate business model, with favorable long-term opportunities for growth," the filing says.

This is just the latest chapter in a long history of Icahn trying to exert influence on companies and their boards of directors in hopes of either motivating a merger or having his stake bought out at a premium.

In the 1980s, he famously took over airline TWA and immediately liquidated most of its assets. Since then, he's taken big stakes or controlling positions in companies including RJR Nabisco, Viacom, Marvel Comics, Blockbuster and Netflix.

Neither Icahn nor Ackman responded to requests for comment. Herbalife also declined to comment.

The battle over Herbalife is becoming a Wall Street spectacle, with money managers supporting either team Ackman or team Icahn.

Robert L. Chapman Jr., managing member of Chapman Capital in Manhattan Beach, who said he has invested in Herbalife, wrote in an email: "Carl Icahn just delivered Bill Ackman a Valentine he'll never forget."

andrew.tangel@latimes.com,

stuart.pfeifer@latimes.com

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American, US Airways approve merger

A long-anticipated merger of American Airlines and US Airways is expected to be announced Thursday after weeks of closed-door negotiations, according to people briefed on the deal. The transaction would create the nation's largest carrier and cap an era of consolidation in a troubled industry.

The marriage of American, based in Fort Worth, and its smaller competitor based in Tempe, Ariz., would form an airline valued at $11 billion. The union would be the latest in a string of mergers and acquisitions in an industry struggling to stay airborne amid fluctuating fuel costs, labor strife and economic turbulence.

The new airline would retain the name American, have its headquarters in Fort Worth and be the biggest carrier in eight of the nation's largest airports including Los Angeles, according to the sources, who were not authorized to speak publicly. The airline is expected to surpass its competitors in revenue, passengers served and fleet size. In the first few years, the merger could generate savings and increased revenue of up to $1.2 billion, according to Robert Herbst, an industry consultant.

Quiz: Test your knowledge about airport security

But critics say another airline merger would only hurt passengers.

With newly merged airlines eliminating overlapping service, fares are certain to rise and carriers will probably stop serving less-profitable markets, some critics argue. Since 2007, the average domestic airfare has increased 15%, according to federal statistics.

"You don't have to be an economics professor to understand that less competition in the market is going to result in consumers paying more, and airfares are certainly not immune from this simple fact," said Brandon M. Macsata, executive director of the Assn. for Airline Passenger Rights advocacy group.

But industry experts predict the merger of American and US Airways won't lead to significant fare increases because the two airlines rarely compete head to head, and because there are enough other airline competitors in the market.

"Out of all of the major airline mergers we've had in the last decade, this merger has the least amount of overlapping of flights and routes," Herbst said.

In fact, the airlines seem to complement each other in several ways.

US Airways now has a large presence in mid-size markets such as Charlotte, N.C., Philadelphia and Phoenix, while American Airlines dominates in some of the nation's largest airports, with more international destinations.

"American likes to be a presence in big markets, and US Airways likes to be No. 1 in small markets," said Seth Kaplan, a managing partner at Airline Weekly, a trade magazine.

The merger must still be approved by federal regulators, but industry experts don't expect opposition.

The deal would mark the latest in a series of mergers and acquisitions that has narrowed the industry to a handful of mega-airlines and several smaller, regional carriers.

In the last five years, Delta has merged with Northwest Airlines, United has merged with Continental and Southwest has acquired AirTran — resulting in a 10% drop in passenger capacity, according to a study by the International Air Transport Assn., an industry trade group.

The odds of a merger increased when American's parent company, AMR, filed for bankruptcy in November 2011. Many analysts and AMR creditors argued that American could compete against other big airlines only by joining forces with another carrier to reduce costs and expand its service area.

For months, US Airways pushed for the merger, with American's top executive initially resisting until it became clear that the carrier's unions and many of its creditors supported a deal.

Another thorny issue that may have delayed a merger announcement was deciding who would run the new company. Board members for the two airlines have reportedly agreed to name US Airways Chief Executive Doug Parker as CEO of the merged airline. AMR's chief executive, Thomas Horton, will be non-executive board chairman.

The ownership of the new airline will be split 72% for AMR creditors and 28% for US Airways shareholders.

One of the toughest parts about pushing through a merger — the integration of unions and their often conflicting contracts — has been already largely ironed out. The merger must still be approved by the Bankruptcy Court.

hugo.martin@latimes.com

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Apple CEO Tim Cook calls shareholder suit a 'silly sideshow'

SAN FRANCISCO — Apple Inc. Chief Executive Tim Cook criticized a rebellious investor for creating a "silly sideshow" by filing a lawsuit a few weeks before the company's annual shareholder conference.

"Frankly, I find it bizarre that we find ourselves being sued for doing something that's good for shareholders," Cook said. "It's a silly sideshow, honestly. My preference would be that everyone take the money they are spending on this and donate it to a worthy cause."

Cook made his remarks during an interview at a Goldman Sachs technology conference Tuesday. The one-hour appearance covered a variety of subjects, including the shareholder dispute, whether Apple had lost its innovation mojo and the continued expansion of its stores.

If Cook was feeling the pressure of a falling stock price and investor anger, he didn't show it. His remarks displayed an unusual amount of passion and even glibness for a man who carries a more buttoned-down reputation.

For instance, Cook talked about his larger view that Apple's long-term advantage lies in its relentless focus on making "great products" that produced moments of "magic." He said competitors would have a difficult time matching Apple's combined strengths in software, hardware and services.

"Innovation is so deeply embedded in Apple's culture, the boldness, the ambition, a belief that there are not limits, the desire among our people to not just make good products, but to make the very best products in the world," Cook said. "It's as strong as ever. It's in the values and the DNA of the company. I feel fantastic about it. There's not a better place for innovation."

But Cook grew feisty when discussing the challenge issued by David Einhorn of Greenlight Capital Inc. Last week, Einhorn went public with his request that Apple issue a special class of stock to shareholders. Einhorn and other shareholders have been pressing Apple to do more with the $120 billion in cash on its balance sheet.

Einhorn also sued to block a proposition that Apple had placed on its annual proxy ballot that would require a shareholder vote before issuing such a stock.

At first, Cook seemed ready to extend an olive branch of sorts to Einhorn, saying his proposal for a special class of stock might have some merit.

"I think it's creative," he said. "We are going to thoroughly evaluate their current proposal. We welcome all ideas from all our shareholders."

But from there, Cook fired back against some of the criticisms leveled by Einhorn, including his remarks that Apple has a "Depression-era mentality" because it's hoarding cash.

Cook listed several areas in which Apple is investing money, including infrastructure, talent and new products, in addition to announcing last year that it would return $45 billion to shareholders in stock dividends.

"Apple doesn't have a Depression-era mentality," he said. "I don't know how a company with a Depression mind-set would have done all of those things."

Cook said the Cupertino, Calif., company is not going to launch a campaign to get the proposition passed, in part because he believes that its pro-shareholder nature should be self-evident to investors.

"You're not going to see a 'Yes on 2' sign in my yard," Cook said. "It's a distraction. And it's not a seminal issue for Apple."

Apple plans to file its response to Einhorn's lawsuit by the end of Wednesday. And a hearing on the matter is set for next week in District Court in New York.

The annual shareholder meeting is scheduled Feb. 27.

Cook repeated that Apple is continuing to consider whether and how it might return more cash to shareholders.

"It's a privilege to be in a position where we can seriously consider returning additional cash to shareholders," he said.

Cook also used the word "privilege" to describe the kind of issues facing Apple's stores.

He reiterated how crucial the stores remain to Apple. And he discussed the company's expansion plans for its stores by noting that they were becoming so popular that their capacity was being strained by the number of visitors.

"Some of our stores aren't big enough," he said. "It's a privilege to have this kind of issue."

Cook said Apple is shutting down 20 stores and moving them to locations where they can be expanded. In addition, the company will open 30 stores at new locations, mostly outside the U.S., including its first in Turkey. Apple will then have stores in 13 countries.

Last year Apple's 400-plus stores attracted about 120 million people. Cook said the stores' popularity reflected the different philosophy that went into creating them.

"It's a retail experience where you walk in and you realize the store is not here for the purposes of selling; it's here for the purpose of serving," he said.

Apple spends about $1 billion annually on capital expenditures related to retail. Cook said the stores have been essential in terms of introducing people to new products. He said it's hard to imagine Apple's iPad tablet becoming as successful as it has without having a place where customers can see and touch something they had never experienced.

"There's no better place to discover and play and learn about our products than in retail," Cook said.

chris.obrien@latimes.com

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