Anger in Europe over executive pay is finding its way into legislation. The European Parliament, backed by almost all of the EU's finance ministers, plans to cap bankers' bonuses, and 68 percent of Swiss voters endorsed a referendum initiative to ban "golden parachutes" and put other curbs on bosses' pay.

Agitated voters, grandstanding politicians and intelligent policy rarely go together, and this is a case in point.

Let's agree that people are right to be disgusted. In the last decade, top bankers led the world into the deepest economic slump since the 1930s, and their firms had to be rescued by taxpayers, yet the culprits aren't exactly suffering. In most cases they still have their jobs and by ordinary standards they're still outrageously well-paid. Bonuses — whose purpose, one is always told, is to reward excellent performance — have fallen but are still being handed out.