Why California is Still America's Future

The Golden State has fought the status quo since its birth 160 years ago. But even amid a particularly rough chapter in the state's history, the nation's future is being written in California. A special report

Jeff Minton for TIME

Governor Arnold Schwarzenegger laughs off the California-is-over drama: "It's all bogus."

California, you may have heard, is an apocalyptic mess of raging wildfires, soaring unemployment, mass foreclosures and political paralysis. It's dysfunctional. It's ungovernable. Its bond rating is barely above junk. It's so broke, it had to hand out IOUs while its leaders debated how many prisoners to release and parks to close. Nevada aired ads mocking California's business climate to lure its entrepreneurs. The media portray California as a noir fantasyland of overcrowded schools, perpetual droughts, celebrity breakdowns, illegal immigration, hellish congestion and general malaise, captured in headlines like "Meltdown on the Ocean" and "California's Wipeout Economy" and "Will California Become...

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