These things aren't mutually exclusive. I completely agree that billionaires live in a bubble where they're completely detached from the suffering they cause. However, where the mental aspect comes in is in pursuit of wealth for the sake of wealth. And there is a selection process in play as well. Since the amount of wealth one can hoard is the sole fitness function, it selects for behaviors that are most efficient at achieving this. People who are willing to step on others, to lie, cheat, steal, and do any sorts of immoral actions are rewarded with success. People who have moral qualms end up being outcompeted by those who don't.

I completely agree with you that it is a systemic problem within capitalism, and the focus should be on moving away from capitalism towards a system that rewards cooperative behaviors where individual self interest aligns with the interest of the majority.