I didn't say "peers" (plural). I said "peer." It's one thing to take your peers as a whole and say you're better than them (and I'd agree that, by definition, if most people make that determination, they're wrong), but a very different thing to take a single peer and believe that you're better. You may still be wrong, but it's easier to semi-objectively evaluate differences between your skills and a single other person's.
Of course everyone is biased to some extent, but the bottom line is that some people will correctly assess as skills difference. If you have 10 people of varying ability (even only slightly varying), all making the same amount, 5 of them will be equal or better than the average of all of them.
Then they should get unhappy, they should test the market and they should find out that they're wrong. Who knows, maybe they'll realize they need to step up their game.
I really hate this "just keep 'em dumb and happy" nonsense. We're not children (and you shouldn't treat children like that either).
Value is not only completely subjective, but almost always biased. Most people think they are more valuable than their peers, and most are wrong.