Markets don't reward smart people. They reward value.

Reason reports:

It's a good thing that French President Nicolas Sarkozy is brimming with amour-propre because he certainly did not earn any amour from the business elite gathered in Davos last month. In a bombastic riposte—delivered, no doubt, in one of his fabulously expensive designer suits—he proclaimed that the recent financial meltdown had demonstrated that letting markets decide executive compensation was "morally indefensible." "There are remuneration packages that will no longer be tolerated because they bear no relationship to merit," he said.

But here's some news for Mr. Sarkozy: Markets don't reward merit; they reward value—two very different things. If Mr. Sarkozy does not appreciate the difference, it's not his fault actually. Most advocates of markets have failed to fully make this distinction, perpetuating a cult of market meritocracy—something that has hindered, not helped, the cause of free markets.

An article well worth your time.