This response has always seemed meaningless to the point of insult; and the conspiracy theorist in me wonders how much of "they don't REALLY want/need money" is motivated by the people who have to pay out.
(sorry, this comes off as very blunt, please take it as only a comment on the argument and not you, but I needed to use strong words to express the strength of what it makes me feel)
As you say, "essentials for life" are different in the valley, but are also different per-person. My essentials were MUCH simpler when I was living alone. When I got a fiancee in industry, my essentials became easier to support Now that she went into academia, it suddenly became a struggle.
Combine this with area of living, and what do you see? That the "essentials" are far more dynamic than your argument typically lets on, not only in terms of material differences like spousal compensation/how many children you're supporting, but psychological/learned response, e.g. "I have to get my used car repaired every year or so because I can't afford a new one off the lot".
Is that essential? Different people could probably make different arguments. Does it hurt when you have that thought pulling in next to someone driving a Porsche? You better damn well bet it does.
So to bring this back to the root: VERY LONG TERM maybe I could agree with you, but life isn't just a very long term calculation, the dominating thoughts day to day are (at least for the less zen of us) very now-focused, and expose many situations in which a little more money (as a parent comment said) would drastically increase the quality of life.