How Should EFL Teachers Deal With Stereotypes?

I recently had a conversation that went like this:
Anonymous person: I lived in such and such city for eight years.
TEFL Logue (well, Katie): Oh, what did you think of it ?
Anonymous person: I didn’t like it. All the xxxx people sell drugs and never work. Plus, local people are racist.

Sharing this anecdote is mostly rhetorical; it’s hard for me to imagine what a proper or effective response to this would be. But it is very real and definitely not the first time I have encountered such an apparently contradictory stance (not to mention a prejudiced view).

These kinds of views disturb me greatly. Working abroad and having the chance to travel has enhanced my appreciation of diversity, and also, I think, given me the ability to sometimes step back and “respect” a local tradition or view even if I don’t agree with it. Still, this seems different.

Perhaps the best reply would have been to say in surprise “Oh, that’s quite a strong statement. It’s definitely not the same where I’m from.” I was stunned enough though that I just paused and changed the subject, which I must say I’m not too proud of.

However, this didn’t happen in a work context though – and my question is – what do you do when negative stereotype, or “that kind” of view, comes up class?

On the one hand, the role of an EFL teacher is to teach a language – not to teach educated adults how to think. In a very pragmatic sense, telling a student, “Aha, so you’re a racist” is unlikely to result in any sort of productive atmosphere; these are people you are supposed to establish some kind of rapport with. But at the same time, it feels wrong not to say anything.

I once brought up the question – independently, not in response to someone’s view – “What would you do if someone you didn’t know well shared a bigoted (vocab word) view?” One student suggested “shock therapy”, which might be a good way of describing what kids’ teacher Gdog at the Daily Kimchi did here.

The other complication is that adult students at private language schools are essentially clients. There are plenty of views (or just comments or ideas) I have which I just keep to myself and refrain from sharing with my students. Would a business traveler feel obligated to act if a client shared some bigoted views? I think quite likely not, and people may say a teacher is different…but a teacher of adults abroad is not the same as a teacher of children at home.

Thoughts?