Decay

clipped from prudentbear.com This time around, the decaying industry is finance, and the rust belt cities are London and New York. The parallels with the U.S. automobile industry are closer than they look. In the early years of the auto industry, it included both large companies and small specialty manufacturers, the latter being remembered now as producers of “vintage” cars of very high quality. Then the Great Depression wiped out most of the specialty producers, which could not compete with the mass producers’ costs. For the next several decades, the business was dominated by a heavily-capitalized oligopoly with extremely highly paid employees, quite high profitability but deteriorating product quality. Finally, it became clear that the oligopoly was uncompetitive and the industry began to shed workers and close plants.