It is one thing when the best-paid people seem to be the smartest and the most accomplished. Those who make much less may not like it, but the differential seems understandable. It is another thing when those people are shown to have committed huge blunders that would have driven their companies out of business, and them into the unemployment line, but for government bailouts.

Just how much the demand for financial innovation will fade is unclear, of course. “These things come in waves,” Mr. Philippon said in an interview. “If for the next 10 years, we go back to a ’60s-style economy, where big firms make investments without taking too much risk, finance will shrink.” But, he added, if the green revolution, alternative energy and biotech “turn out to be like electricity, then we will need them.”

Here's the upcoming green bubble again.