"The teacher was trying to illustrate the fact that it is perfectly natural to believe that one's own group has some form of superiority over other groups. You hear this all the time, and it is even encouraged, with such often-heard statements as "The United States is the greatest country in the world"."

Your explanation as to what he really meant is racist. Your example of the United States, otherwise known as American Exceptionalism is generally racist as well, especially as taught in Texas schoolbooks. When the term American Exceptionalism was coined it was definitely racist, as is "Manifest Destiny." This was no slip of the tongue which he acknowledged when he said nobody says it out loud.