Last weekend, the news was buzzing that John Mack, the chief executive of Morgan Stanley, was given a $40m Christmas bonus, the biggest ever awarded to a Wall Street boss.

True, the announcement was made just before the securities firm announced a 26 per cent rise in its fourth quarter profit to $2.21 billion. But is one man really worth that much?

Still, the record didn't even last week with news that Goldman Sachs chairman and chief executive Lloyd C. Blankfein is pocketing $53.4 million for 2006.

Again, it raises the same question. Although Steven Pearlstein from the Washington Post puts it much more eloquently in his piece:

"Who says Wall Street isn't a meritocracy?

"Actually, I do. Nobody who is hired help and who plays with other people's money "deserves" to earn $100 million. That's certainly true in a moral sense. But it is also true economically. For despite what you hear from all the apologists about the "market" for financial superstars, this is a highly imperfect market.

"If you were putting your own money at risk, there's the possibility of making lots more, but there's also the possibility you could lose it all. The same, however, can't be said if you are an investment banker, a hedge fund manager or a trader in credit default swaps. In that case, if you do well, you get a percentage of the winnings or the value of the deal. But if you do poorly and your clients lose money, the worst that happens is that your bonus is zero. You never have to give back anything from the bonus you earned last year. And you still get a base salary comfortable enough to keep up payments on the Upper East Side townhouse, the summer place on Nantucket and the tuitions at Brearley.

"Wall Street is a classic example of an oligopoly, a cozy club of competitive firms that manage somehow not to compete on price. There are lots of reasons. Because the fees are, even now, a small fraction of the money at risk, clients are less focused on price than on the reputation of the firm and its key employees. Nobody ever lost their job hiring Goldman Sachs. Because of this reality, it is difficult for new firms to enter, while existing firms know they can get more business by bidding up the price of talent than by cutting fees.

"My biggest problem with the rationalizations for Wall Street pay, however, has to do with the widely held misconception that top executives are somehow entitled to some fixed percentage of the profit or a percentage of the gain in a company's market value.

"This is, of course, the way we calculate waiters' tips. And it makes sense for small, closely held partnerships. But today's large, global corporations have become so big, the numbers so large, that they provide inappropriate benchmarks when calculating the compensation of a single human being. There's no limit to how big a company can get, but human beings are limited in how much they can eat, or how many homes they can occupy, or how many days they have to take vacation."

Hear hear!