The scale and speed of money pouring into artificial intelligence resembles the information boom of 2000 and may eventually lead to a correction, said US economist James K. Galbraith, a professor at the University of Texas at Austin. “It certainly looks like a very big one (bubble). You have a large amount of overinvestment, which will not be borne by real returns, and so eventually there will be a reckoning like in 2000 with the information boom,” Galbraith said during a session at the Hindustan Times Leadership Summit 2025 in Delhi. While governments appear determined to build momentum, he warned that policymakers will not be able to sustain the boom permanently. “The government is much more intent on keeping it going. Good luck to them. I don’t think they necessarily have the power to do it forever,” he said. Galbraith, who has long studied global power dynamics, said despite deep economic and geopolitical tensions from slowing economic growth and the US tariff freeze, the world may not be locked in a long-term downward spiral. “I think there is considerable potential for stabilization of the world situation. That we were headed for a confrontation that we now have at least a possibility of avoiding,” Galbraith said. “And so I have a modest optimism that the worst-case scenarios can be averted. It is not certain and the situation remains very dangerous.” On the US government’s attempt to revive American manufacturing, Galbraith said tariffs provide only limited and temporary benefits. While some European firms may shift production to the US due to the energy crisis caused by sanctions on Russia, the impact will be modest. “The problem with tariffs is that they’re an administrative measure that’s being put in place. They can’t impose them for 30 years. They can impose them, you can expect them to continue for the life of this administration, which in our system is another three years. And so, beyond that point, the future is deeply uncertain,” Galbraith said. The recent US-China tariff row illustrates these limits. After the US raised tariffs and expanded its entity list, China retaliated by restricting exports of rare earth metals and gallium, which are critical inputs for advanced chips. The US quickly sought a ceasefire once it became clear that domestic supply chains were at risk. “There is nothing the US can do in a year that will significantly affect the availability of rare earth metals,” he said. “And nothing they can do on any time horizon that will give them an alternative supply of gallium.” This forced both sides to pause and reconsider, creating temporary stability. As for India, Galbraith said strong gross domestic product (GDP) numbers mask deep-seated inequality, poverty and demographic pressures. “One unfortunate fact of the Indian situation is a very high level of inequality by international standards,” he said, warning against overstating the growth rate, which he described as “not a meaningful indicator of social well-being, stability or public health.” Real progress, he said, depends on improving social services, reducing household cost pressures and prioritizing environmental and public health goals, even if this slows headline growth. “Economic growth is not the only thing you have to look at. There is a problem of obsession with the economic growth rate,” he said. Galbraith said wealthy economies are also showing clear signs of demographic stress driven by the widening gap between household income and fixed expenses in increasingly urbanized, high-cost societies. “This will be true, and is increasingly true in India as it is anywhere else,” he said, adding that the crunch can only be addressed by rethinking resource costs, strengthening social services and supporting overall quality of life for the population.