There is little argument that the CEOs of many major U.S. corporations are overpaid. The relevant questions involve the degree of overpayment and what, if anything, government should do to correct the problem.

Of course, "overpaid" is a value judgment that varies with the beholder. But one can make comparisons over time and between countries that support that conclusion.

The ratio of executive salaries to that of their average employees or to per capita income in the general population is one measure that has grown sharply in recent years. Compensation expert Graef Crystal notes that a century ago, J.P. Morgan said a 20-1 ratio of CEO earnings to that of average workers was fair. Years later, management guru Peter Drucker agreed on that number.

In 1974, the actual ratio was 35 to 1. By 1991, CEO compensation had increased to 150 times worker pay. In 2008, Crystal found a factor of 293 for all Fortune 500 corporations and 525 to 1 for the largest 50.

If you look at the ratio of top management pay to overall corporate earnings, you find the same pattern. The slice of the pie that goes to top executives has grown over time.

Studies consistently find that U.S. executives are paid more than their counterparts running similar companies in other industrialized countries.

The gap is narrowing, however, when one compares major multinationals based in Europe to similar U.S. firms.

One study, using somewhat different definitions of compensation than Crystal did, found that CEOs outearned the income per capita by a factor of 475 in the United States compared with 22 in Britain, 20 in Canada and Italy, 12 in Germany and 11 in Japan.

Some argue that rising executive pay simply reflects superior management performance. But it is hard to square a change from a factor of 35 to 293 over the span of three decades. Earnings have not improved that markedly, if at all.

It is similarly hard to argue that U.S. managers earn 20 times more for their shareholders than their Canadian counterparts.

Another argument is that there is more competition for really superior CEOs, just as there is for star professional athletes. Large corporations therefore have no choice but to pay large sums or they will lose superior managers to competitors.

But again, it is hard to see why this has only become important recently and why it is not true elsewhere.

Free-market enthusiasts argue that however pay levels have changed, this is the outcome of a free-market process and hence must be economically efficient. Any government response will only make society worse off.

But other economists see clear market failure. Burgeoning CEO pay is an example of a "principal-agent problem," in which the incentives for top executives (the agents) differ from the best interests of the stockholders who employ them (the principals).

Poorly matched incentives mean executives can feather their own financial nests at the expense of the stockholders in whose interests the managers theoretically work. The majority of economists probably think this is true to at least some extent.

Economist Edward Lotterman teaches and writes in St. Paul, Minn. Write him at ed@edlotterman.com.