What people/industry will be the richest after this current depression?

December 2, 2008 4:43 PM

What industry/people came out the richest after the Great Depression? And what industry/people do you predict will be the richest after the one we are headed towards?

I don’t mean firefighter, public servant, etc. I am looking for specific people or industries that actually grew larger and many times more profitable as a direct result of the depression.

I remember reading about the robber barons, but don’t know if that was during the depression. And also the short sellers during the first depression.

I know it is kind of capitalistic/evil to be thinking about, but the more important question that I have is who do you think will be the richest after the depression is over? Will it be a industry like technology or a specific group of people?

The reason I ask is because I am fresh out of college and would pursue whatever industry you suggest. I am completely motivated by money (and I know I will hear some comments about that, however please refrain from judging me on this characteristic).

posted by schindyguy to work & money (16 comments total)

In the US, the Depression didn't really end until WWII. The companies that did well were those which manufactured war goods e.g. Henry Kaiser (steel, ships).
posted by Class Goat at 4:51 PM on December 2, 2008 [1 favorite has favorites]

Probably the military-industrial complex was the richest, because the US needed massive amounts of equipment for World War II.

The robber barons you are talking about were from before the Great Depression; their time was mostly the late 19th century.

After this recession (it's not a depression yet), it's anyone's guess. I think "green" technology is an interesting area that might take off, especially if it's helped out by the new administration.
posted by bangitliketmac at 4:55 PM on December 2, 2008 [1 favorite has favorites]

The military. No, really. Adjusted for inflation, the US defense budget went from about $25 billion in 1940 to $800 billion by 1944. You might remember that there was a war on. After the war, it dropped back to the $60 billion range, but after 1952 it's barely cracked a $300 billion floor.

So try to get a job with Boeing, General Dynamics, General Electric, Northrup Grumman, Electric Boat, or some other major arms contractor. Not only do economic depressions tend to encourage fascistic, militaristic tendencies in national mindsets--how else are you supposed to soak up half a million unemployed young men?--but it isn't like the government is going to cut defense spending any time in the near future.
posted by valkyryn at 5:00 PM on December 2, 2008 [1 favorite has favorites]

Now that I am reading this, I am more interested in what you guys think will be the richest industry during this recession (officially yesterday I guess) and depression (which technically hasnt hit yet). Not so much about the history of the Great Depression
posted by schindyguy at 5:01 PM on December 2, 2008

Two things come to mind:
First, companies that cater to inferior goods generally do well, or at least not as bad as others. Places like Wal-Mart, dollar stores, and retail cheap goods get a bigger market share because people can't afford organic foods or luxury items. Companies that make less expensive substitutes and necessities, like soup, pasta, that sort of thing get more business. Maybe Proctor & Gamble?

Second, companies that are big enough to weather just about any recession come out ahead. Look at the banks. The biggest ones went on the offensive and gobbled up the smaller regional banks. When the smaller competitors are in trouble, the bigger companies can buy them up cheap, then accelerate their growth when times get better. JPMorgan Chase is a great example.
posted by JuiceBoxHero at 5:12 PM on December 2, 2008

What did you study in school?

In the US we're an increasingly service based economy. Not sure if that's sustainable or not, but it provides the easiest path for entrepreneurship. That's important because if you want to get rich you're probably going to need to own the business. It's tough to make big cash as a wage slave.

Health care seems like a growth industry.

Maybe something to do with batteries.

We're probably entering a new period of heavy regulation, so there will probably be major opportunities for accountants and maybe consultants.

There may be a lot of infrastructure repair, so engineering could be a good choice in the short term.

Real estate and banking will probably be a little depressed for a while, but should come back strong over time. Those take a fair amount of capital to get in on.
posted by willnot at 5:23 PM on December 2, 2008 [1 favorite has favorites]

In a good, just and decent world, the green energy sector would be the one that powers the economy out of the present crisis. But I'm tipping it will be the arms trade.
posted by flabdablet at 5:44 PM on December 2, 2008 [1 favorite has favorites]

No one is going to do really well during the coming depression (there, I said it), but the companies that are most likely to survive and be in a position to grow are those with little debt and great cash flow. Insurance companies - especially car insurance - will do OK. Tech companies will be hurting, especially consumer electronics (hard to justify an iPhone or a big TV when you don't know if you'll have a paycheck next month).

You can either bet on the companies that will have decent business during the depression (i.e., car insurance, utilities, flour manufacturers) or ones that will do poorly but can survive who will then have great opportunities once the economy picks up (as all their competitors are dead). In this category, companies with excellent management, no debt, plenty of cash, and great potential for growth during a good economy are ones I'd look at. I'd look at infrastructure companies like Cisco and see if any meet these criteria.
posted by zippy at 5:52 PM on December 2, 2008

There are going to be a whole slew of brand new investment firms made up of all the people who lost their jobs when the investment banks were put out of business. A few of them are going to succeed wildly.

Also, I'd guess this Spring will be a big time buyers market in real estate. If you have lots of capital and lots of time, real estate can be very lucrative.
posted by tkolar at 6:36 PM on December 2, 2008 [1 favorite has favorites]

You know, this depression talk is really off base. Just wrong. Read some damned history, look at some of the pictures. That is NOT what is happening now.
posted by gjc at 7:45 PM on December 2, 2008 [5 favorites has favorites]

Lawyers
posted by meosl at 7:48 PM on December 2, 2008

Real estate. No, really. Well-run real estate investors with cash on hand now are buying, because nobody else can. What they're buying, they're snapping up for a fraction of appraisals. Even if the market stagnates, potentially for years (Japan 1990s style), that's income-generating property purchased at low prices with little or no debt against it.

There are probably a number of related fields that will do pretty well during the recession, like movers. People will need to relocate to find jobs. And fuel costs have crashed, so they can lower their prices to the market.

Recruiters and headhunters who make their money off job-seekers rather than hirers. Training companies for people seeking new careers.

M&A finance types will probably have a field day. The big money won't be happening, but the deals will come fast and furious, as viable businesses snap up the assets of failing ones at fire sale prices.

Bankruptcy trustee is not actually a lucrative field (costs often exceed remuneration), but it's definitely a growing one, if you have a law degree and other prerequisites including experience in litigating cases.

Collections is probably a big one right now. Some creditors are saving money by sending accounts to collections faster and using them more as a back-office versus the expense of in-house loss mitigation.

If I were an auto mechanic, I would train up for green vehicle repair, so I could be a specialist as they proliferate, as seems likely due to the projected terms of a bailout.

I don't know how long this recession is going to last, but I have heard 18-24 months as conservative estimates, especially as things like the $2 trillion projected consumer credit retraction kick in. When recovery appears it will be weak and bleak. This may not be a "depression" in the "Great" sense, but if there was a great depression, there must have been less-than-great depressions as well. This might be the one that gets a discussion going on a real definition. It will certainly be a deep and long recession by any measure.

I really, really hope that we don't get out of it through a war.
posted by dhartung at 9:53 PM on December 2, 2008 [1 favorite has favorites]

By the by, you can get an idea of what industries did fairly well during the Great Depression by looking at the companies added to the Dow Jones Industrial Average during that period. New components are marked with asterisks (removed components just disappear). Just for starters, the auto industry, chemicals, and consumer products were all up-and-comers.
posted by dhartung at 10:03 PM on December 2, 2008 [1 favorite has favorites]

"You know, this depression talk is really off base. Just wrong. Read some damned history, look at some of the pictures. That is NOT what is happening now."

Once again, sorry that it was phrased "depression"; maybe it was subconsciously added for effect. I understand that we are economically in a recession.
posted by schindyguy at 11:52 PM on December 2, 2008

Recovery this time will have little to do with what happened in the past. America has used up too many of its natural resources (iron is mostly gone, as is the steel industry and much worse, machine tools), and lost too much manufacturing base. That combination paints a bleak future. Healthcare and related technology might hold well.
posted by Goofyy at 7:45 AM on December 3, 2008

If you look at the demographics, we're looking at a "perfect storm" for healthcare. Lots of demand, supply that isn't increasing all that quickly, and there's a willingness on the part of the government to print money to keep it around. That makes it basically recession/depression-proof.

I don't know if becoming a doctor is really a path to great wealth, though: I expect that whether the system remains private or gets socialized, they'll be under a lot of pressure to keep their rates down either way. I suspect physicians will always have a place in the middle or upper-middle class, but it's difficult to become uber-rich as a skilled laborer. For that you'd probably be better trying your hand at entrepreneurship in an ancillary industry, like medical supplies and equipment, or maybe even healthcare management / consulting. (But nothing that relies too much on the existence of a health insurance industry: they're middlemen, and middlemen tend to get squeezed when the going gets tough.)

The scenarios where I can imagine the healthcare industry collapsing (really collapsing into widespread unemployment of the people involved; socialization might be viewed as a collapse by some but you'd still have a job, probably) would be real Mad Max end-of-civilization type situations. I don't see that being very likely.
posted by Kadin2048 at 11:35 AM on December 3, 2008 [1 favorite has favorites]