So the argument goes: Without government aid then, no $20 billion-plus in bonuses for Goldman Sachs's employees in 2009? Maybe zero in bonuses, maybe indeed, no Goldman Sachs at all. Against that background, the bonuses seem egregious. It seems that the government drove a bad bargain when it bailed out Goldman, that it should have demanded a big chunk of Goldman's future profits.
Against this, it can also be argued that a generous bailout was justified by the need to strengthen the banks so that they would lend. And I agree. It is true that the banks have not increased their lending by the amount of money that they received from the government, but had they not received it, they would be lending even less than they are.
Goldman's 2009 profits -- the source of the bonuses -- are not from lending, however, but from proprietary trading. That is, it has been using its own capital for speculation: buying stocks and bonds, and selling stocks and bonds short, and engaging in other speculative maneuvers.
There is nothing wrong with speculation, but its social value is not as great as the profits of successful speculators. The social value of speculation is its contribution to a more accurate valuation of assets, in this case of stocks and bonds. The contribution by an individual speculator, even one as large and expert as Goldman Sachs, must certainly be a great deal smaller than its profits. If Goldman Sachs makes $10 billion trading stocks and bonds, the individuals or firms on the other side of its transactions are $10 billion poorer. It is because the profits from successful trading so greatly exceed the social value of that trading that there is suspicion that too much IQ is being sucked into finance.
In theory, stock prices discount expected corporate profits, and bond prices discount expectations regarding inflation, default risk, and other determinants of interest rates. But the swings, especially in stock prices, greatly exceed the swings in corporate profits. A great deal of the profits made and losses incurred in speculation in stocks do little or nothing to align stock prices more closely with the actual value of the assets of the companies whose stocks are traded. This is another reason to doubt that the profits of successful stock speculators are closely related to the information value of speculation.
So the traders working for Goldman probably are "overpaid" in the sense that their incomes send a bad signal from an economic standpoint to the labor market. PhDs in physics are lured to Wall Street but would probably contribute more to economic welfare by using their scientific skills in business, government, or academia.
The worst consequence of the Goldman bonuses, however, lies in the realm of politics rather than of economics narrowly construed. The degree of economic equality/inequality in a society is bounded: if incomes are made too equal, say by heavily redistributive tax and spending policies, incentives for innovation, enterprise, and hard work will dwindle and the wealth of the society decline, and these effects will put pressure on government to relax its egalitarian policies.