California's gubernatorial election has mistakenly focused on a purported statewide industrial meltdown that simply does not exist. No one disputes Sacramento's maddening financial irresponsibility. Yet, as large as the budget deficit may be, it remains a small fraction of the state's trillion-dollar economy.

The crucial issue is whether our political leaders can protect and enhance the gains made by California's fast-growing regions, collectively an economy as big and dynamic as Texas. And then they must explain how Los Angeles and the Bay Area, the state's tragic pockets of Northeastern-style economic stagnation, can be turned around.

This task has far less to do with the nuts and bolts of taxes or regulation than political culture. All of California is subject to the same labor, environmental, housing, public spending and other basic laws. Yet, in just 40% of the state, these rules somehow profoundly narrow economic opportunities. Even after all of the last decade's ballyhooed expansion, the slow-growth parts of California now have 77,000 fewer net jobs than in 1990. The state's fast-growth areas gained nearly 2 million jobs over the same period.

Why the big difference?

What seems to have happened is that as the 1980s drew to a close, the prevailing political sentiment in the Los Angeles and greater San Francisco areas markedly changed. Prior to that time, even California's most urban and cosmopolitan communities were inspired by the state's historical "go west" desire for upward mobility. People came to the state to build dynasties, not perpetuate them. Its political leaders were firmly committed to doing whatever was necessary to fuel that ambition, including mammoth roadway, water and energy projects.

But then, as had previously occurred in places like New York, upwardly mobile parents and grandparents gave way to far more comfortably situated and much less motivated offspring. They found allies with similar sentiments from among the burgeoning, heavily subsidized educational, government and health sectors, all of which were divorced from, if not ideologically hostile to, the private economy.

In short order, the working and middle class were excised from large parts of what would become slow-growth California in the 1990s. Places like San Jose, San Mateo, or L.A.'s entire coastal crescent, once manufacturing and blue-collar employment hotbeds, suddenly became exclusive, high-end, and staggeringly expensive communities. Massive public sector expansion artificially pushed costs up in nearby areas, like Downtown L.A., that might have otherwise emerged as new, full-spectrum industrial centers.

Squeezed by these trends, the middle and working class economy redeployed to less desirable, less expensive and relatively conservative parts of California, like Riverside, San Bernardino, Solano and Sacramento counties. These became fast-growth California. And an increasingly expensive, controversial system of state spending arose to deal with those unable to benefit from the limited economic capacity remaining in the state's slow-growth regions.

As the 1990s boom progressed, the state's economy developed in ways that clearly reflect its political and cultural divisions. The expansion of slow-growth California was limited to elite white-collar employment and the public and quasi-public sectors. Fast-growth California exhibited much more balanced development.

Just four sectors -- professional business services (lawyers, accountants, advertising), information (dot-coms, telecommunication, movies), education, and health and government accounted for 75% of all of the new jobs created in the Bay Area and Los Angeles County between 1993 and 2000. These sectors generated just 57% of all new employment in the faster growing parts of the state. Virtually none of slow-growth California's net new jobs were in manufacturing, wholesale, finance (including real estate and insurance) and transportation. But these blue collar and middle class sectors accounted for 22% of all the new jobs created in the state's fast-growth regions.

Unsurprisingly, slow-growth California proved strikingly vulnerable in the last recession, shedding 400,000 jobs since 2000. Fast-growth California actually created net new jobs in the teeth of the national slowdown. By 2003, as its Northeastern-style politics intensified, slow-growth California's employment base slipped below the 1990 baseline, a ghastly setback obscured in statewide figures only by fast-growth California's remarkable gains.

In many ways, California now mirrors the geographic split that emerged among states like New York, which consciously abandoned a full spectrum economy in favor of elite and public sector development, and the Southeastern states that became their political and economic rivals. California's fast- and slow-growth regions are just as sharply divided in their views about the desirability of economic development, the role of government, and the application of the overarching rules that govern all of its citizens. But unlike the East Coast, California's conflicts are largely contained within a single political system.

California desperately needs leaders who can build a new consensus that makes broad-based growth possible throughout their fractured state. Tragically, no such awareness can yet be found in the current political debate.