Bankers, including me, are paid out of all proportion to their contribution to society. This is because a good banker makes a lot more for his employer than a less good one, and that amount is, at least in his employer's expectation, more than it costs to employ him. To put it simply, it's an artefact of the capitalist system.
Similar considerations apply to professional footballers: footballers are less likely to precipitate a global finanical crisis, but on the other hand are paid a larger proportion of the money they bring in.
There has been much criticism of the bonus system in banking: in fact the system worked well in the crisis, enabling banks to slash staff costs by greatly reducing bonuses. In the resulting fall-out, banking salaries have tended to increase as banks seek to retain staff in a recovering financial market. Salary is now a larger fraction of total "compensation", so there will be less flexibility to cut costs in the next crisis.
It's been suggested that it would be better to pay bonuses in deferred shares, i.e. shares that cannot be sold for some number of years after they are awarded. Banks already do this, and it doesn't work to deter risk-taking. It's reasonable to suppose that one of the reasons Lehman Bothers failed is that the Dick Fuld, the Chairman and CEO, was unwilling to accept the takeover deal on offer at a late stage from the Korea Development Bank, because it would wipe out the value of his shareholding. It would be better to pay bonuses partly in convertible preference shares, because they would retain value if ordinary shareholders were wiped out but subordinated creditors were paid.
George Osborne now says he wants to stop British High-Street banks - including their investment banking divisions - paying cash bonuses above two thousand pounds this year. Of coure he's in opposition this year, so this is pure posturing. But if his proposal were to be implemented, any remaining staff in those investment banks good enough to get jobs elsewhere would do so, because bankers, like most other people, are not anxious to work for an employer who is not able and willing to pay the market value for what they're doing. Does he think bankers are so worthless that this would not be bad for the banks concerned? If so, he should say so.
There's a lot wrong with the global financial system. It might be possible to do something about it by means of co-ordinated international action. Successful reform would reduce the amount that bankers get paid. It would also very likely reduce the contribution of banking to the British economy, which governments of both parties have made it a policy to pursue. If that's what Osborne wants, he should say so, and put forward coherent proposals to achieve it. Until then, he should keep quiet.