Overpaid Bankers

Paul Krugman's column today is a cri de coeur from a very frustrated reformer:

...we should be disturbed by an article in Sunday’s Times reporting that
pay at investment banks, after dipping last year, is soaring again — right back
up to 2007 levels. Why is this disturbing? Let me count the ways.

First, there’s no longer any reason to believe that the wizards of Wall
Street actually contribute anything positive to society, let alone enough to
justify those humongous paychecks. Remember that the gilded Wall Street of
2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other
industries, yet kept the economy’s wheels turning.

So why did some bankers suddenly begin making vast fortunes? It was, we
were told, a reward for their creativity — for financial innovation. At this
point, however, it’s hard to think of any major recent financial innovations
that actually aided society, as opposed to being new, improved ways to blow
bubbles, evade regulations and implement de facto Ponzi schemes.