Whenever people see old systems still in production (say things that are over 30 years old) the assumption is that management refused to fund the replacement. But if you look at replacement projects so many of them are such dismal failures that's management's reluctance to engage in fixing stuff is understandable.
From the outside, decline always looks like a choice, because the exact form the decline takes was chosen. The issue is that all the choices are bad.
You're right that an important reason why it's hard to replace those 30+ year old systems, and that part of the reason is that the current devs are not necessarily at the same level as those who built the original. But at least in part, this is due to survivorship bias.
Plenty of the systems that were built 30-50 years ago HAVE been shut down, and those that were not tend to be the most useful ones.
A more important tell, though, is that you see traditional IT systems as the measuring stick for progress. If you do a review of history, you'll see that what is seen as the measuring stick changes over time.
For instance, in the 50's and 60's, the speed of cars and airplanes was a key measuring sticks. Today, we don't even HAVE planes in operation that match the SR-71 or Concorde, and car improvements are more incremental and practical than spectacular.
In the 70s and into the 80s, space exploration and flying cars had the role. We still don't have flying cars, and very little happened in space from 1985 until Elon (who grew up in that era) resumed it, based on his dream of going to Mars.
In the 90s, as Gen-X'ers (who had been growing up with C64/Amiga's) grew up, computers (PC) were the rage. But over the last 20 years little has happened with the hardware (and traditional software) except that the number of cores/socket has been going up.
In the 2000s, mobile phones were the New Thing, alongside apps like social media, uber, etc. Since 2015, that has been pretty slow, too, though.
Every generations tends to devalue the breakthroughs that came after they turned 30.
Boomers were not impressed by computers. Many loved their cars, but remained nostalgic about the old ones.
X-ers would often stay with PC's as the milennials switched to phones-only. Some X-ers may still be a bit disappointed that there's no flying cars, Moon Base and no Mars Colony yet (though Elon, an X'er is working on those).
And now, some Milennials do not seem to realize that we're in the middle of the greatest revolution in human history (or pre-history for that matter).
And developers (both X'ers and millennials) in particular seem to resist it more than most. They want to keep their dependable von Neumann architecture computing paradigm. The skills they have been building up over their career. The source of their pride and their dignity.
They don't WANT AI to be the next paradigm. Instead, they want THEIR paradigm to improve even further. They hold on to it as long as they can get away with it. They downplay of revolutionary it is.
The fact, though, is that every kid today walks around with R2D2 and C3PO in their pockets. And production of physical robots have gone exponential, too. A few more years at this rate, and it will be everywhere.
Walking around today, 2025 isn't all that different from 2015. But 2035 may well be as different from 2025 as 2025 is to 1925.
And you say the West is declining?
Well, for Europe (including Russia), this is true. Apart from DeepMind (London), very little happens in Europe now.
Also, China is a competitor now. But so was the USSR a couple of generations ago, especially with Sputnik.
The US is still in the leadership position, though, if only barely. China is catching up, but they're still behind in many areas.
Just like with Sputnik, the US may need to pull itself together to maintain the lead.
But if you think all development has ended, you're like a boomer in 2010, using planes and cars as the measuring stick that thinks that nothing significant happened since 1985.