Call them the dueling magazine portraits.

"Who killed California's economy?" asked Forbes columnist Joel Kotkin in July.

Then came "Despite its woes, California Dream still lives," by Time magazine's Michael Grunwald. In it, Gov. Arnold Schwarzenegger proclaims that allegations that "California is over" are "all bogus."

Who's correct?

Mr. Kotkin, who spoke in Sonoma County Friday, wrote that "unable to pay its bills ... the state that once boasted the seventh-largest gross domestic product in the world is looking less like a celebrated global innovator and more like a fiscal basket case along the lines of Argentina or Latvia."

He blames the governor directly, the public sector unions, excessive environmental regulation, too little public participation by business and ballot-box governance.

But Time's Mr. Grunwald disagrees. With a nod to the state's budget dysfunction, "it's still a dream state. In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future."

One would hope that were true. But there is reason to fear it is not.

If the state remains a center of innovation, it is not because of Sacramento, it is despite it. The real forces behind innovation are the Stanfords and UCs backed by plentiful venture capital.

But because of the state's fiscal dysfunction -- cuts to UC, for instance -- and infrastructure gridlock -- the Bay Bridge debacle being just the most recent -- the threat of a California brain drain is all too real.

One can only hope Mr. Grunwald is correct when he writes that "California is not imploding" and that it is merely in another phase of rewriting itself via a constitutional convention or other sweeping reform.

But it somehow doesn't feel like that at the moment. How could it with more than 12 percent of California residents  unemployed with no prospects in sight and businesses continuing to be extremely cautious in the face of new federal and state mandates?

In the end, the awakening of the business community may be the key to revival.

"The business community is so afraid they are keeping their heads down," Mr. Kotkin was told by Ross DeVol, director of regional economics at the Milken Institute. "I feel that if they keep this up much longer, they won't have heads."

That, Mr. Kotkin said, should be a call to action.

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Brad Bollinger is Business Journal editor in chief and associate publisher. He can be reached at 707-521-4251 or bbollinger@busjrnl.com.