It’s probably a while still before we see bank CEOs on street corners selling the homeless news.

But reports last week of bank presidents cutting their own pay were somewhat eye-catching. (For a little perspective: Rick Waugh of Bank of Nova Scotia will take home $7.5 million this year — after his cut.)

Still, the pay cuts suggest that even inside the most well-fortified Bay Street towers there are jitters that the people down below may start questioning how the economic pie is divided and why they are getting such a small — and shrinking — slice.

Certainly revelations of Wall Street hijinks have raised questions about the skewed nature of financial rewards and, more generally, about how far North American culture has drifted from what used to be known as the "work ethic."

We’re waking up to the fact that, starting in the 1980s, a sea change swept away concerns about inequality and unleashed an era of greed and skyrocketing incomes at the top.

We’re told that exorbitant pay is necessary to motivate great performance.

But that canard was surely put to rest last month by John Thain, former CEO of Merrill Lynch. Thain explained that it had been necessary to pay $4 billion in executive bonuses to keep the "best people," after those people had just steered the company to a net loss of $27 billion and helped trigger a global recession. (What might some less capable people have done — start a nuclear war?)

Even when there is great performance, does the wild inflation in top incomes make sense?

Take baseball. In the early 1970s, Hank Aaron was the top-paid player at $200,000 a year. Last year, Alex Rodriguez, with similarly dazzling statistics, earned $27.7 million. Adjusting for inflation (but not for drugs), that makes Rodriguez’s pay more than 25 times greater than Aaron’s. Is Rodriguez’s performance more than 25 times better?

There’s no evidence that today’s phenomenal pay packages — in sports, entertainment or business — are motivating today’s players, performers or executives to any higher performance levels than more modest packages did a few decades ago.

Indeed, there’s little logic to our approach to financial rewards. People want to be compensated for work — particularly when it involves drudgery or unpleasantness. But those at the top typically love their jobs, and are motivated by the desire to excel and win recognition. Money is one form of recognition, but there’s no evidence that financial rewards have to be gigantic, or that much larger financial rewards produce any greater results.

Vincent van Gogh was motivated to produce hundreds of works of great art, even though he only managed to sell one of them, for a pittance, just before he died. Shakespeare produced the world’s greatest dramas without even the prospect they’d become Hollywood blockbusters.

The pay for those at the top has gotten ridiculously out of whack in recent years. Among other things, this underlines the need for a more progressive tax system.

It’s also been noted that if we cut the pay of those running our financial institutions, they might seek more useful employment as teachers or health-care workers.

But a letter to The New York Times last week made a compelling case for maintaining Wall Street bonuses: "Without them, Wall Streeters will all look for other jobs. Do we really want these greedy, incompetent clowns building our houses, teaching our children or driving our cabs?"

Linda McQuaig is author of It’s the Crude, Dude: War, Big Oil and the Fight for the Planet.

Linda McQuaig

Journalist and best-selling author Linda McQuaig has developed a reputation for challenging the establishment. As a reporter for The Globe and Mail, she won a National Newspaper Award in 1989...