Why Wall Streeters and Estate Lawyers Make a Bundle

Meant to call attention to this column by Robert Samuelson last year but didn't get around to it.

Most of us are paid based on what we produce or, more realistically, what our employers produce. By contrast, Wall Street compensation levels are tied to the nation's overall wealth.

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There's a big difference between annual production and national wealth. In 2007, the year before the crisis, annual production (gross domestic product) equaled almost $14 trillion. In the same year, household wealth was $77 trillion (5.5 times production); that covered the value of homes, vehicles, stocks, bonds and the like ….

People who are trying to protect or expand existing wealth are playing for much higher money stakes than even hardworking and highly skilled producers. That's the main reason they're paid more. Similar percentage changes in production and wealth translate into much larger gains or losses in wealth…. Many lawyers enjoy the same envious position of being paid on the basis of wealth enhancement or protection. They're involved in high-stakes mergers and acquisitions, estate planning, divorces and tax planning. On average, partners in the top 25 law firms earned $1.3 million to $4 million in 2008….