The scale and speed of money pouring into artificial intelligence resemble the information boom of 2000 and may ultimately lead to a correction, said American economist James K. Galbraith, professor at the University of Texas at Austin.<\/p>\n
\u201cThis certainly looks like a very big one (bubble). You’ve got a great deal of overinvestment, which will not be borne out with real returns and so ultimately, there will be a reckoning as there was in 2000 with the information boom,\u201d said Galbraith during a session at the Hindustan Times Leadership Summit 2025 in Delhi.<\/p>\n
While governments appear determined to build momentum, he cautioned that policymakers will not be able to sustain the surge permanently. \u201cThe government is much more intent upon keeping this going. Good luck to them. I don\u2019t think they necessarily have the power to do that forever,\u201d he said.<\/p>\n
Galbraith, who has long studied global power dynamics, said that despite deep economic and geopolitical tensions owing to slowing economic growth and the US tariff<\/a> row, the world may not be locked into a long-term downward spiral.<\/p>\n \u201cI think that there is a considerable potential for stabilization of the world situation. That we were heading toward a confrontation that now we have at least some possibility of avoiding,\u201d Galbraith said. \u201c And so, I have some modest optimism that the worst scenarios can be averted. It is not certain and the situation remains very dangerous\u201d.<\/p>\n On the US government’s push to revive American manufacturing, Galbraith said tariffs offer only limited and temporary benefits. While some European firms could shift production to the US because of the energy crunch triggered by sanctions on Russia<\/a>, the impact will be modest.<\/p>\n \u201cThe problem with tariffs is that it’s an administrative measure that’s imposed. They can’t impose it for 30 years. They can impose it, you can expect them to continue for the lifetime of this administration, which in our system is another three years. And so, beyond that point, the future is deeply uncertain,\u201d said Galbraith.<\/p>\n Also Read<\/strong> | RBI crafts a Goldilocks moment with surprise rate cut<\/a><\/p>\n The recent US\u2013China tariff row illustrates these limits. After the US escalated tariffs and widened its entities list, China retaliated by restricting exports of rare earths and gallium, which are critical inputs for advanced chips. The US quickly sought a truce once it became clear that domestic supply chains were at risk.<\/p>\n \u201cThere\u2019s nothing the US can do in a year that will significantly affect its availability of rare earths,\u201d he said. \u201cAnd nothing they can do on any time horizon that will give them an alternative supply of gallium.\u201d<\/p>\n This has forced both sides to pause and reassess, creating temporary stability.<\/p>\n On India, Galbraith said strong gross domestic product<\/a> (GDP) numbers mask deeply rooted inequality, poverty and demographic pressures.<\/p>\n \u201cOne unfortunate fact of the Indian situation is a very high level of inequality by international standards,\u201d he said, warning against over-emphasizing the growth rate, which he described as \u201cnot a meaningful indicator of social well-being, stability or public health.\u201d<\/p>\n Real progress, he said, depends on improving social services, reducing household cost pressures and prioritizing environmental and public-health goals, even if that slows headline growth.<\/p>\n \u201cEconomic growth is not the only thing you should be looking at. There is a problem of obsessing on the economic growth rate,\u201d he said.<\/p>\n