The only reason I acquire wealth is to improve the lives of my children and grandchildren relative to their peers. If that option was taken away, I would have no reason to do anything but the bare minimum.

This is such an utterly insane position that I find myself doubting that you are being honest here. It suggests you don't actually care at all about the wellbeing of your children, and only about your family's status.

Imagine a scenario where you could banish your children to a hellish, poverty-stricken existence -- but their peers would be even worse off than that. Alternatively, you could give your children a happy, comfortable life, but all of their peers would be equal to them.

Are you seriously suggesting that you would choose the first option, not the second one?

Your question implies a central planning of allocation of resources which we know from history results in exactly the hellish abject poverty you were so concerned about. Market economies full of rationally self interested people create the best life outcomes for everyone around. We are ALL better off if we are all in friendly competition to live the best lives possible.

I agree that friendly competition is important. It's the "relative to their peers" part that I find shocking.

Obviously I want my own children to live the best possible life I can give them, but I want their peers to do well, too. It is crazy to me to care only about your children's status in their community, rather than their absolute wellbeing and the wellbeing of the community they are a part of.

You are presenting a false choice. He’s not comparing his children to others, he’s doing the most to do for them in absolute terms

He literally said "relative to their peers". I seems like you have read the comment as you want it to be, not as it is actually worded.